CPA: City never signed letter of engagement for audit

CPA: City never signed letter of engagement for audit


A letter of engagement required under accounting standards was never signed by the city of Philadelphia and only a minimal amount of financial information requested from the City Clerk was ever provided over the last two years in order to perform audits, a partner in an accounting firm that has withdrawn told The Neshoba Democrat Wednesday.

The accounting firm, Watkins, Ward and Stafford, was never officially hired to do financial audits for the city of Philadelphia and they were never paid for any services, said Marsha McDonald, a partner in the firm with about 15 offices statewide and who manages the Philadelphia office.

The overdue audits came to light last week when a Neshoba Democrat reporter asked city officials in an open meeting for the latest audit and they could not provide one.

The Mayor and Board of Aldermen on Tuesday night hired a Pearl accounting firm which, according to the mayor, pledged to get the city out of a potential bind with the State Auditor over the overdue audits that have not been performed since 2017.

McDonald told the Democrat Wednesday that her office on July 11, 2019, submitted a quote to do audits for fiscal years 2018 and 2019 for the city of Philadelphia.

“When you audit, we have a standard that tells us what we have to do and when we have to do it,” McDonald said. “The first thing we have to do is get a quote. So, we sent the quote. I never got my signed quote back.

“After you get the signed quote, you have to get an engagement letter. And that’s the only time you are truly hired to do the audit,” McDonald said.

“We never had an engagement letter. We were never really hired. They kept saying when are you going to start? I had started some work but it had taken so long to get what we got, we had a lot more jobs come up. It was so far behind, I didn’t feel like I had the manpower to get it caught up.”

McDonald said she never billed the city because she never completed an audit and the bill comes due when the audit is complete.

In a letter to City Attorney Robert Thomas dated Friday, Sept. 17, McDonald wrote of the firm’s decision to withdraw.

Only a minimal amount of information was ever provided by the City Clerk in order to do an audit, McDonald said.

“We did an information request to the City Clerk for what would have been needed to perform the audit; however, only a minimal amount of that information request was satisfied,” McDonald wrote.

Watkins, Ward and Stafford reached out to the city numerous times without response, the letter said.

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