The 2016 financial statement for the Mount Vernon Industrial Development Agency that was due in March is close to being finished six months late, an auditor said, because numerous ledger corrections and adjustments had to be made to make it work.
“We looked at thousands and thousands of pages of documents,” William H. Cochran, senior audit manager of RBT CPAs in Poughkeepsie, said at a special IDA meeting on Thursday. “Accounts were not where they should have been.”
“It was a very hard reconciliation, one of the largest I”™ve ever done,” he said.
The IDA adopted the draft audit, subject to minor revisions.
The audit covers the first year of the IDA under Mayor Richard Thomas”™ leadership, but Cochran said the problems pre-date the mayor”™s tenure. He had to comb through the 2015 general ledger and supporting documents to come up with an opening balance for last year.
Overall, the IDA ended 2016 with nearly $7 million in assets and $1.6 million in liabilities, for a $5.4 million net position. It made more money than it spent on operations, with a positive cash flow of $78,048.
Getting to those numbers was an arduous process.
As Cochran began seeing errors in the 2015 audit, he said, he realized he could not rely on the previous report.
The 2015 financial statement was done by Yeboa & Lawrence CPA in Pelham. The voice mailbox was full and no one answered the phone when the firm was called for a response.
RBT made 21 ledger adjustments, mostly for items that had been miscoded.
But there were four significant adjustments: $265,624 regarding payments in lieu of taxes, $256,261 on accounts receivable, $121,265 on deferred revenue, and reclassification of entries that were recorded in the wrong accounts.
Under operating revenue, for example, “everything was called rent,” even if it was not rent.
He found $155,000 in accounts receivable for which there was no supporting evidence.
“So I had to get that out of there.”
He found $255,000 in past due payments, going back at least 10 years, for payments in lieu of taxes.
“We identified a deficiency in internal control,” the draft audit states, “that we consider to be a material weakness.”
That”™s accounting talk for a problem so significant that there is a reasonable possibility that big mistakes on a financial statement will not be prevented, detected or corrected.
“Those responsible for the books and records,” the draft audit states, “did not keep the accounting records updated as needed.”
Cochran recommended that the agency hire a full-time accounting professional.
“You can”™t just use a part-time bookkeeper,” he said. “You need somebody who can read an agreement and pull out the action items.”
Thomas related the audit findings to skirmishes he has fought with political rivals Maureen Walker, the city comptroller who also serves on the IDA, and city council members Andre Wallace and Marcus Griffith.
Walker has refused to pay bills for vital services, the mayor said in comments during and after the IDA meeting, and city council has refused to fund critical positions such as building inspectors.
He said the IDA had to hire consultants to do the work of inspectors. They cleared a backlog of 450 building permits, for example, and approved $2.4 million in renovations and construction.
Without those consultants, “No kitchens get replaced. No roofs get fixed. The underground infrastructure just gets worse.”
Thomas said the IDA, which is a component of the city, is posed to sue the city itself to recover funds it spent on consultants.
He described the RBT work as a forensic audit and said he wants the same kind of audit done on the Urban Renewal Agency, water department and the city itself.
“He”™s a liar and a crook,” Wallace said. “He”™s misappropriated the funds of the IDA since he came into office.”
He said the city council has nothing to do with IDA funding and Thomas probably hired the consultants as a way to pay back campaign donors.
Griffith did not respond to an email request for comment.
Walker, who did not attend the IDA meeting, said she has not yet seen the audit. She called Thomas”™ accusations nothing new.
“He lays the blame where it shouldn”™t be and he refuses to take the responsibility.”
When her term as comptroller ends this year, after 24 years in office, she said she will have served the public well.
“I will leave with my head held up high and my hands clean.”
