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Newport Beach seeks new auditing firm

Finance Committee recommends parting ways with city's longtime auditor, Mayer Hoffman McCann, which was recently connected to the highly-publicized City of Bell audit.

April 11, 2011|Amber Gonzales, dailypilot@latimes.com

NEWPORT BEACH — The city's Finance Committee recommended at its Monday meeting that the City Council sign a four-year contract with a new auditing firm rather than renew Mayer Hoffman McCann — the city's auditor for the past 10 years.

Staff and council members did not like that the firm was connected to the city of Bell's audit and that the state controller reported that the company failed to follow generally accepted standards in that case.

It should take about three weeks for the contract to be drawn up with Diehl, Evans &Co. LLP and may be voted on by the first council meeting in May.

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"I have nothing bad to say about Mayer Hoffman," Mayor Mike Henn said. "There is a perception at least that staff can become complacent."

The city sent out proposals to seven auditing firms Feb. 16, according to the Finance Committee report. Four firms responded and were rated by members of the Administrative Services, Public Works and Library Services Departments.

The group rejected Lane, Soll & Lunghard CPAs because its clients were less comparable to Newport Beach, as well as Macias, Gini & O'Connell because it had mixed client reviews.

Diehl, Evans & Co. came with a policy on slow growth management, a "more glowing" list of reviews and a recommendation from Huntington Beach, a former client.

Although Mayer Hoffman McCann charged the smallest price and proposed the least amount of hours, Councilwoman Leslie Daigle was against the firm. She said she thought it was hard for her to defend the choice to Newport residents when they brought up the legal problems facing Mayer Hoffman.

"I think 10 years, no matter who it is, it's good," said Daigle, who later clarified her remarks as meaning that it's good for the city to get a fresh set of eyes to audit its finances.

In a previous Daily Pilot article, Newport Beach Deputy Director of Administrative Services Dan Matusiewicz said he's comfortable with Mayer Hoffman's past Newport audits.

"We continue to stand by the city of Newport Beach financial statements and the related audit opinion issued upon them," Matusiewicz wrote in an e-mail, according to the previous article.

Councilman Keith Curry said he wouldn't have rejected re-signing Mayer Hoffman McCann because there had never been any problems with the firm in Newport Beach.

Diehl, Evans & Co. will start as soon as its contract is ready, said Assistant City Manager Dana Smith.

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