Auditing questions persist about New Milford's finances

NEW MILFORD -- Questions are being asked about auditor BlumShapiro's findings for New Milford's fiscal year 2009-10.

Resident Jeff Winter, who admits to having political aspirations, has questioned the quality and veracity of financial records kept by the town's finance director, Ray Jankowski, during Mayor Pat Murphy's seven-plus years in office.

Board of Finance Vice Chairman Bob Sherry said he might have "dropped the ball," in giving Jankowski too much control over choices of auditors.

"The auditee should not be in charge of the auditors and able to replace the auditors if he is not happy with their findings," Sherry said Wednesday.

Jankowski sees things from a different perspective. "I know some people want to infer all the problems are with me," he said. "It's been the practice of the town since before I came here to change auditors every three years. It keeps everything on the up and up. Nobody gets too cozy."

New Milford is going out to bid for a new auditor after two years with BlumShapiro. Ridgefield and Redding give the firm favorable reviews.

"BlumShapiro has done a fantastic job," said Redding Board of Finance chairman Bill Alvarez, who has worked along with the firm since 2008. "They knew the municipal space. They have a lot of municipal clients and were a firm to go after."

Winter asked why auditing firms in New Milford are changed in a three-year cycle.

He noted BlumShapiro's findings of "material weakness in internal control over financial reporting" and a July 2010 state Office of Policy and Management letter asking for a corrective management plan from the town to address "significant deficiencies in internal control," cited in successive audits.

"I have concerns about the finances in general," Winter said. "Auditors' findings show me the mayor and Mr. Jankowski are not serious about financial issues and this results in an inefficient use of resources."

Murphy denied the assertion.

She supports Jankowski's stand that the auditor's comments are not "materially indicative of our internal controls."

Jankowski was hired in July 1990, according to personnel records. He has served under six mayors, Republican and Democratic.

A review of 24 town audits, starting five years before Jankowski -- fiscal years 1985 to 2008 -- showed eight firms have been used.

The average time for retention of auditors has been three years, with the firm of McDermott & DeLeo LLP on from fiscal 2000 to 2004.

BlumShapiro was hired for the 2009 audit.

"I think this audit cost BlumShapiro more than they bid," Jankowski said Wednesday, "and it was the same for the last firm.

"The first year BlumShapiro was here, they asked me for more money," said the finance director. "I told them their bid was what it was. We gave it another try and things were going along well, then it all fell apart."

"Material weaknesses" in the town's internal control of its financial reporting have been cited by four auditing firms starting in 1988 with the firm McGladrey & Pullen. This term was used again in 1994, 1996 and 2000 audit findings by three other firms.

In earlier audits, Jankowski provided the Board of Finance with "Response to Management" letters following audits. No response letters are included with audits after fiscal 2006.

Sherry has served on the finance board since 1999.

"I was chairman when the auditors were changed last time," he said Wednesday. "I'm feeling I may have dropped the ball then in that we left it to Ray to interview and then present the auditors to us."

"We made a mistake," he added. "We should have interviewed the auditors as a board."

Sherry said the board "came to trust Ray" over the years, relegating more and more responsibility to him.

"We had no reason not to trust Ray. I'm not pointing fingers," Sherry said. "But I told Ray I wanted him to keep us appraised of what was happening with repeated concerns arising with audits.

"That has not been done," he added. "There's supposed to be management reviews."

Jankowski said the scrutiny is unwarranted.

In regards to seeking a new auditing firm for the 2010-11 audit, he said it is mutual between the town and the partners of BlumShapiro to end the relationship.

"The people who do count, the rating agencies and the investors, we're in good standing with them," said Jankowski. "And that's what matters."