Audit of KJ hit as 'appalling'
Albany – State Comptroller Alan Hevesi is recommending prosecutors launch an investigation into the accounting firm that audited Kiryas Joel schools and 54 other districts.
"The work of Miller, Lilly & Pearce was so appallingly inadequate that it would shock anyone associated with the auditing profession and certainly the taxpayers who depend on the firm to safeguard their money," Hevesi said after reviewing the firm's work for a Long Island district where top school officials were charged with stealing millions "I am extremely troubled by our findings."
The alleged problems with the accounting firm were uncovered during a Hevesi audit of the Roslyn School District for the years district leaders have been accused of embezzling $2.3 million. Most of the districts the firm worked for were on Long Island.
Kiryas Joel Superintendent Steven Benardo said he was unaware of any problems with Miller, Lilly and Pearce's work at his district, but Hevesi's charges were enough for him to begin looking for a new firm.
"Now that there is a report, and it does point at the accounting firm, obviously this school district, which has been supervised, observed, reviewed and analyzed by every agency in the state, certainly will need to the review our relationship with any company whose integrity is being questioned by the state comptroller," Benardo said. "My intent is the board and I will both determine what our next steps are, which probably is to choose a different accounting firm."
A receptionist who answered the phone at the Suffolk County-based accounting firm said company officials would not be commenting.
In his findings, Hevesi charged that the firm failed to meet nine auditing standards in its work at Roslyn, any one of which would have warranted a referral to the State Board for Public Accountancy. He also said the firm had a conflict of interest because its partners sold computer software to school districts where they had been hired as "independent" auditors.
"I recommend that Kiryas Joel and the other districts that used this firm carefully review their audit performance and protocols," Hevesi said. "Our auditors found fraud so pervasive [in Roslyn] that it would have taken significant effort not to uncover it. Even a rudimentary review of disbursements and canceled checks would have revealed many instances of wrongdoing."
http://www.recordonline.com/archive/2005/01/08/audit08.htm