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Council defends audit choice
Decision based on what was best for city, councilors say
At least two city councilors said they stand behind their votes to select a Pendleton-based accounting firm to handle the city’s audits, a decision that has come under fire from the local business community about taking the business out of town.
“The decision we made was based on a whole lot of work and what we felt would be best for the city,” said Councilor John Lackey, who serves on the council’s audit committee. “I hate to take this out of the city. Is it a good decision? You betcha.”
The La Grande City Council voted 4-3 on Feb. 19 to select Pendleton-based Dickey and Tremper, LLP, to handle the City of La Grande’s audits, ending a long-standing affiliation with La Grande firm Seydel, Lewis, Poe, Moeller & Gunderson, LLC.
Councilor John Bozarth said he, too, supports the decision and the work Lackey has put into his time on the audit committee.
“I go along with what he found out,” Bozarth said.
Lackey said once he was seated on the council and appointed to the audit committee last year, he started doing his homework.
“The governing body is ultimately responsible for internal controls and financial reporting responsibilities,” Lackey said.
As a member of the audit committee, he looked into whether the city had sent out a request for proposals for auditing services in the past but could find no records of any. In reading material from the League of Oregon Cities, government finance reviews and material from the Government Financial Officers Association, Lackey found that it is recommended that governing bodies assess the adequacy of audit reports every five years. He noted that does not necessarily mean firms should be switched. Lackey says he also looked into about 10 other municipalities to see whether they go out for proposals.
“I think that’s doing your diligence,” he said.
Critics of the decision point to the price difference between the two firms as another reason the business should have remained in La Grande. Seydel et al. gave a cost proposal of about $9,000 less than Dickey and Tremper over the next five fiscal years.
“Although we’re being criticized for (the cost), it wasn’t the top priority,” Lackey said. The councilor said reference materials indicate such an important decision shouldn’t be made on cost alone.
In citing an article from the Government Accountability Office, he said he also found that it’s recommended that municipalities employ multi-year agreements for continuity but also that they should employ an “audit rotation.”
“Although (Seydel et al.) rotate their person, which is a good thing, the firm has a philosophy about auditing,” Lackey said.
The councilor said those attitudes impact the way they do business. While Lackey said he has no issues with the work Seydel et al. have done, the city has been with the firm for 40 years.
“I think it’s probably time to change,” he said.
Lackey said he was also impressed that the Pendleton firm offered additional services for internal controls if needed, although that was not a requirement under the request for proposals.
Four firms submitted proposals to handle the City of La Grande’s audits, of which two are based in La Grande. Guyer & Associates also submitted a proposal.
Lackey noted that he and Councilor Jerry Sebestyen, the other member of the audit committee, rated the four firms that submitted proposals along with City Manager Robert Strope and Finance Director Kim Hulse. They found Dickey and Tremper to be the top choice, with Seydel et al. following in second. The top two choices were forwarded to the council for a decision.
The selection of an out-of-town accounting firm prompted representatives from both the Union County Chamber of Commerce and La Grande Main Street Downtown to read letters emphasizing the importance of keeping dollars local during the public comment portion of Wednesday’s regular session of the La Grande City Council.
“Without the investment of that dollar into the local economy, its potential impact to sustain our businesses, schools, and civic organizations is effectively transferred to another community,” the Chamber’s letter said in part. The letter was signed by 10 board members. Chamber President David Wildman noted that some board members did not sign the letter due to close personal ties to the recent decision, including City Manager Strope.
La Grande Main Street Board Chairman John Howard read a similar letter.
“In your role — and I certainly respect your role as elected officials. I’ve been there, done that for many many years — you will continue to make decisions related to the city,” Howard said. “And therefore we must take this opportunity to stress the importance of keeping (business) local with future arrangements.”
Bozarth said he doesn’t think the council decision will impact their credibility with the push to shop local.
“We have to do what we feel is best for the city, and we did that,” he said. “I think those letters were unfounded because they didn’t have the facts for why we did it.”
At Wednesday’s meeting, Sebestyen asked whether the decision could be reconsidered. A letter of engagement has already been sent to the Pendleton firm, and the city manager said he would have to look into what could be done if the council wants to reconsider the decision.
“As far as I’m concerned, the decision was final when the council took action,” Strope said. “I haven’t been given the guidance to reconsider.”