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Feb 11, 2009 12:08 PMPublication: The Southampton Press

Town might seek forensic audit of capital budget

Feb 11, 2009 12:08 PM

A public scolding by a former councilman over the state of the town’s capital budget prompted two Southampton Town Board members to call for an independent, forensic accounting of the municipality’s books.

A forensic audit is a more detailed, investigative analysis than a routine financial review, but not one necessarily meant to uncover wrongdoing.

During Tuesday’s Town Board meeting, Dennis Suskind lambasted Town Supervisor Linda Kabot for the discrepancy in the town’s capital ledger—originally said to be $19 million and now reduced to $250,000—and for the delay in notifying the rest of the board and the public.

“This is simply not acceptable,” Mr. Suskind said. “I don’t believe there is anything criminal here. I believe it’s merely an accounting error. But you had a fiduciary responsibility to report this to the board.”

Mr. Suskind, who served on the Town Board with Ms. Kabot when she was a councilwoman, also directed criticism at Town Comptroller Steve Brautigam, who Mr. Suskind said had the same obligation to reveal the problems with the capital budget.

“Mr. Nuzzi and Ms. Throne-Holst are right,” Mr. Suskind said. “You should have had these numbers much earlier. You are nine months too late.”

Critical of the town using its own auditing firm, Albrecht, Viggiano, and Zurek, to conduct an audit of the capital budget, Mr. Suskind said the town should bring in an outside firm, a suggestion Mr. Nuzzi and Ms. Throne-Holst took to heart.

“I think we should bring in an outside firm,” Mr. Nuzzi said. “I think that would ease everyone’s concerns.”

“No one has suggested any criminal activity or any suitcases of cash going to the Caribbean,” Ms. Throne-Holst said. “But we need to get to the bottom of these numbers.”

Town Councilwoman Sally Pope, who voiced concerns about the reliability of any future numbers presented through internal audits, agreed with her colleagues.

Ms. Throne-Holst, who called for a forensic audit of the $4.5 million Town Police Fund deficit when she took office in 2008, suggested allocating unused money for that audit toward a thorough capital analysis. In July, the Town Board hired FTI Consulting for $150,000 to conduct the forensic audit focusing on the police deficit. According to Ms. Kabot, only $60,000 of that has been spent. That audit should be completed by the end of March.

Mr. Nuzzi said he wants to find a firm as quickly as possible and Ms. Throne-Holst said whoever was brought in would have to be approved by the full Town Board.

In another attempt to untangle the capital budget mess, the Town Board will soon convene weekly work sessions with department heads to review capital projects.

Ms. Kabot, who says the town’s capital budget now has a $250,000 discrepancy, announced plans for the weekly meetings at the board’s work session Friday. During the conferences, the department heads and Town Board members will discuss outstanding capital projects and try to determine the status of their funding.

The Public Works, Highway and Waste Management departments are slated to meet with the Town Board on Friday, February 13, with the Engineering, Stormwater, and General Services departments to meet the following week, Friday, February 20.

Ms. Kabot said the town’s first priority is to determine the status of last year’s capital projects before moving forward with any new work.

Mr. Brautigam provided the board members with a partial list of 2008 projects on Friday and said his office is trying to pinpoint their funding sources, how much money—if any—has been spent on them, and whether work on those projects has begun, been completed or is somewhere in between. The comptroller also provided the board with a spreadsheet of outstanding bills totalling $244,300 from 17 capital projects undertaken last year.

“These bills need to be paid,” Ms. Kabot said, because the work has been done.

In the meantime, the supervisor announced that all “new” projects slated for 2009 be “frozen” until a full reconciliation of the 2008 capital budget is finalized. “We need to focus on 2008,” Ms. Kabot said. “And then we can look at 2009.”

In an inter-office memo dated February 5, the supervisor informed the town’s department heads that they are not allowed to draw against any existing capital accounts or open new purchase orders until the capital ledger is balanced.

“As many of you realize, there is controversy surrounding this matter in the local newspapers,” the memo reads. “Because of the controversy, the full Town Board has been involved in attempting to see to it that the discrepancy is resolved as quickly as possible.”

That discrepancy, revealed by Ms. Kabot last month, was initially reported to be $19 million, with $35 million posted on town computers, but only $16 million in the bank. Mr. Brautigam’s subsequent calculations have since put the number at $250,000.

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Can you imagine the mess that will happen when the "stimulus" package gets approved and billions of dollars will have to be allocated and spent on projects in 90 days? Will make the graft in Iraq look like nursery school lunch money.
By davidf (325), hampton bays on Feb 6, 09 7:04 PM
ms. kabot, stop pointing your finger at everyone else. the controversy is not in the local newspaper, it's at town hall! it's not the telling of the story it's the story itself. $250,000 is still a lot of money to not account for and how can we trust that what you have on paper is the truth after everything is said and done?
By fdp (23), southampton on Feb 6, 09 9:09 PM
The fact that our Supervisor did not know whether $19 million was unaccounted for or if $250,000 was unaccounted for indicates that she is not capable. The Press's editorial this week said it all.
By Hampton (50), Westhampton on Feb 7, 09 9:24 AM
Most of the money was found-does that mean there is now $34,750,000 in the bank?
By Lefty46 (56), Westhampton on Feb 8, 09 7:12 AM
This kind of back-of-the envelope accounting is unacceptable. It's not like this is rocket science, go back and review your Accounting 101 text book and straighten this out.
By number19 (111), Westhampton on Feb 9, 09 2:20 PM
Accounting 101 is not part of the Civil Service exam, nor secretary school. So give Linda a break. How could a starry eyed gal friday who suddenly ends up as
Supervisor, possibly be expected to add or manage money?

You all expect way too much from morons..........
By G (339), Southampton on Feb 9, 09 2:37 PM
So now the taxpayers will have to pay for an audit. Meanwhile the comptroller whose job it is to manage the budget still gets $100,000 and the budget analyst who they hired at $450 per day last June to do the comptrollers job is still getting paid too. Just how much money has been spent in 2009 with relation to the Comptrollers office. I'd like to see a comparison with the 2007 figures.
Bryan can you provide that for the public?
By Hampton (50), Westhampton on Feb 11, 09 12:35 PM
Getting a professional audit-what an original idea. Why didn't Linda thing of that.
By eastquogueguy (22), East Quogue on Feb 11, 09 3:40 PM
Recall -- Sally Pope asked for an independent audit of the books in her campaign last year. Also note, she asked the state comptrollers office to audit.
By number19 (111), Westhampton on Feb 11, 09 5:39 PM
That's absolutely correct. Sally Pope made that request for a STATE audit a key part of her campaign AND she was wise enough to see this problem from the outside MONTHS before it became a critical issue. Her campaign opponent didn't even want to hear about it and in one debate even asserted that there was lots of extra money around to handle any cost overruns.
By foodie (74), Remsenburg on Feb 11, 09 5:52 PM
"Hampton" is right -- more taxpayer money wasted to discover where other taxpayer money was wasted! And then the "Who, ME?!?" and finger-pointing, and nothing will ever get done -- except more taxpayer money wasted!

They're all inept! Throw the rascals out!
By Frank Wheeler (1824), Northampton on Feb 11, 09 7:50 PM
The STATE audit that Sally Pope proposed many months ago would have cost the Souyhampton Town taxpayers NOTHING - ZERO. But did they listen to her? If you watch the Board meetings with a critical eye she's still asking for the same thing.
By foodie (74), Remsenburg on Feb 12, 09 12:11 PM
What an oddly worded memo the Supervisor wrote. I would expect it to say something like "due to a pending audit and the need to identify shortfalls all capital projects are frozen etc." and NOT "the newspapers are making a stink about this so I am freezing capital projects to make them happy." I am a total outsider to Town Hall and always wanted to believe that Kabot was doing the right thing but that memo really makes me wonder!
By jm (17), Hampton Bays on Feb 12, 09 7:43 PM
Well lets the puppet master is back....he supported Kabot a while ago....and now? Lets see spend 150K to audit the police deficit……been there done that folks you have to fund the department. Realistic budgets and then uh oh so what does it cost to run the police department……I think the police do a pretty good job. But alas what is the budget this year will there be a shortfall and then an additional deficit. Was there an engagement for this new firm……for the audit and when was it to be completed. ...more
By Hamptonman911 (14), Southampton on Feb 15, 09 10:38 AM