Burbank may have to redo nearly $600,000 worth of financial audits done by the same firm under investigation for its role in the employee compensation scandal in Bell, officials said.
Mayer Hoffman McCann is under investigation by California Controller John Chiang’s office to see if it adhered to government standards while auditing Bell, Chiang spokesman Garin Casaleggio said.
The firm has audited Burbank’s financial statements since the fiscal year ending in 2006.
“Along with a series of audits the controller has done to put Bell back on the path of reform, he is also looking at Mayer Hoffman McCann,” Casaleggio said. “The firm gave them a clean bill of health, and that is a serious concern.”
Burbank Financial Services Director Cindy Giraldo said her department has been aware of the Mayer Hoffman McCann contract since the Bell scandal broke in July.
“It was pretty common knowledge,” said Giraldo, who assumed her post in August. “We are waiting to get the state controller’s report before making a recommendation to the City Council.”
Her department has also been recognized with a Certificate of Achievement for Excellence in Financial Reporting since 1983.
Mayor Anja Reinke could not be reached for comment.
The report from the state controller, to be released in the coming weeks, could spell trouble for Burbank’s budget. If the firm was found to be in violation of state guidelines, Burbank would be forced to redo all of the Mayer Hoffman McCann audits to verify the results.
Burbank has paid $575,731 to Mayer Hoffman McCann over the past five years. The annual fee for the firm’s services grew from $83,312 five years ago to $99,529 in 2008, city records show. This year’s contract came in at $92,832.
Burbank still has one year left on its contract with the firm, Giraldo said.
If the state controller uncovers problems with Mayer Hoffman McCann, Burbank’s funding from state and federal sources could be jeopardized, and would be unable to get favorable bond ratings, Casaleggio said.
“Often times, cities will have to have audits redone at their own expense,” Casaleggio said.
In addition to a possible referral to the Board of Accountancy for possible disciplinary action, the state controller will share the audit findings for Mayer Hoffman McCann with the state attorney general and the Los Angeles County district attorney.
“I have reviewed our financial statements, and I have a lot of confidence in our accounting office,” Giraldo said. “If they do find a quality-of-work issue, we will consider what steps need to be taken.”