State taking disciplinary action against Mayer Hoffman McCann
May 25, 2012 3:22 PM
FROM STAFF AND WIRE REPORTS
State officials are taking disciplinary action against the accounting firm Victorville has used for years after the firm failed to find problems in audits of the financially troubled city of Bell.
Board of Accountancy spokeswoman Lauren Hersh tells the Los Angeles Times that Mayer Hoffman McCann could be fined up to $1 million for failing to find widespread corruption in Bell and its individual auditors could face discipline, too.
Former city leaders in Bell are accused of looting the town’s coffers to give themselves exorbitant pay packages.
Hersh says the firm is accused of repeated acts of negligence and failure to maintain documentation in 2009, the year the board examined.
The firm was also criticized in a state controller report from December that said Mayer Hoffman McCann did little more than rubber-stamp problems in Bell.
Mayer Hoffman McCann audited Victorville’s books for the 2005-06 fiscal year. The city then switched to Caporicci & Larson to review its 2006-07 financial statements, but that report was released some 14 months late and the firm declined to issue an opinion on the Victorville’s finances.
For its next audits, Victorville rehired MHM. The firm gave the city clean opinions for the 2007-08, 2008-09 and 2009-10 fiscal years, issuing concerns about the city’s financial stability but putting a couple hundred million dollars worth of assets stripped away by Caporicci & Larson back on city books.
In the wake of the Bell controversy, California cities such as Riverside and organizations such as the Mojave Water Agency dropped MHM. However, Victorville opted to keep MHM to conduct the city’s 2010-11 audit, which was released in March with the same “going concern” for the city’s finances.
Hersh told the Daily Press that even if MHM is disciplined related to its Bell audit, that wouldn’t necessarily impact the firm’s work with Victorville or its dozens of other municipal clients in California
The Associated Press contributed to this report.
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