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Southampton Town Brings in New Auditors

Posted on 24 June 2009

Southampton Town Supervisor Linda Kabot announced on Friday, June 19, that the town will hire a new external auditing firm, Nawrocki Smith, LLP, and is ending a five-year relationship with AVZ, or Albrecht, Viggiano and Zureck.

“I and other members of the town board have been calling for a second opinion … but what we really meant was a transitioning to a new auditing team,” explained Kabot of the new hire.

AVZ worked as the town’s external auditors from 2004 to 2007, when several errors occurred within the town’s capital fund, causing an overstatement of the town’s general fund by around $8 million. When completing their audits for the town, AVZ failed to notice discrepancies in the general fund and the capital fund.

Last week, FTI Consulting was brought in to begin a forensic audit of the town’s reconciliation of the capital fund. According to Kabot, FTI was hired to validate the information already gathered by the town’s financial team.

Nawrocki Smith, a Melville based firm, first interviewed with the town regarding the reconciliation of the capital fund. Both Kabot and town comptroller Tamara Wright said they were impressed with Nawrocki Smith’s qualifications, but opted to hire Manhattan based FTI consulting for the forensic audit of the capital fund. FTI consulting, however, isn’t an auditing firm and cannot certify financial statements for the town.

This Monday, Nawrocki and Smith started the audits for the 2008 financial statements with AVZ helping during the transitional period. One of Nawrocki Smith’s chief duties at the moment is to restate the 2008 year-end financial conditions – to reflect the reconciliation of the capital fund.

Wright said Nawrocki Smith and FTI Consulting predict they will finish the restatement of the 2008 financial reports and the certification of the capital fund database by July. She added that it is imperative for the two firms to work cooperatively in order to finish these projects.

Kabot added that East Hampton Town recently retained the services of Nawrocki Smith as their transitional external auditor. She said the transition to a new auditing firm was based on recommendations made by Wright, the town services administrator Richard Blowes and the town attorney Dan Adams.

The town is also in the midst of wrapping up an audit of the Community Preservation Fund, but because of state law the town was required to hire an additional auditing firm – BST advisers – to complete this audit.

Councilwoman Anna Throne-Holst thanked Wright for her part in bringing in the new auditing firm.

“It hasn’t been easy piecing together this puzzle and trying to keep everyone doing what they are supposed to be doing … There is a real thought process here that will bring the history in order and certify this history,” said Throne-Holst.

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