Newsmaker Interview

Newsmaker Interview
Nassau County Comptroller Discusses Report by Citizens Audit Committee

By Jay Dismukes

After he took office in 2002, Nassau County Comptroller Howard S. Weitzman and his staff found 100 bank accounts that were not recorded in the county’s financial system, opening up the possibility for transactions that could circumvent proper review or even authorization. This lapse in financial controls—not to mention what Weitzman says was an inherited county-wide financial crisis with a $450 million deficit—is probably one of the clearest reasons why the comptroller decided to establish his Audit Advisory Committee. The citizens audit committee, chaired by Ralph Polimeni, dean of Hofstra University’s business school, is believed to be one of very few in the state to provide outside financial advice and oversight to New York’s counties.

Weitzman formed the independent audit committee in 2003 to help monitor Nassau County’s finances, financial statements and outside auditing process, as well as advise the comptroller on audits performed by his office. Earlier this year, the seven-member committee, composed of five county residents with financial expertise and two government officials, issued its first annual report on Nassau County’s fiscal condition and practices.

“I believed very strongly that by creating a citizens audit advisory committee, it would increase both transparency and oversight, since I would give them the authority to issue a report concerning their observations,” said Weitzman, whose campaign platform included more openness and improved governance. “The ability for them to do that would increase the public’s confidence in our financial statements.”

According to Weitzman, the committee paid considerable attention to the actions the county was taking to help alleviate the large deficit it faced, as well as identified threats that could impede its financial recovery. In the eyes of the committee, one of the major threats included a startling breakdown of financial controls, particularly in the area of expenditures, prompting the group to form a special subcommittee that focused solely on this issue.

“There clearly were rudimentary financial controls in place in Nassau County, none of which were documented,” said Weitzman, a CPA who prior to public life managed a very large health care accounting firm. “The county had to improve on those controls and begin the process of completely documenting them so there was a better understanding on the part of the employees charged with the responsibility of following them.”

In its annual report, the committee described the county’s current financial control system as “adequate,” concluding that the administration should continue placing a “high priority” on documentation initiatives. In a related press release, Polimeni noted that this effort is critical to the county’s ability to continue to receive favorable credit ratings.

Among its other major concerns, the audit committee also addressed the financial management problems within agencies of the county’s economic development organization, recommending in its annual report that quasi-governmental organizations “be contractually obligated to establish sound accounting procedures and internal controls.” The committee also focused on the deteriorating financial situation at the Nassau University Medical Center and Healthcare Corporation and its impact on the county. The advisory group reported that the situation continues to require “careful monitoring.”

Though Weitzman voluntarily created the audit committee, he is hopeful that the importance of the oversight body to Nassau’s government operations and financial well-being will lead to its codification and insertion in the county charter, rendering the committee permanent status. Despite what the future may hold for the committee, Weitzman is especially pleased that the formation and work of the audit group directly influenced the embattled Roslyn School District to establish its own independent audit committee of volunteer professionals.

The district, which is part of Nassau County, is one of several in the state that have been investigated over the past year for theft and misuse of school funds. As a result of these financial scandals and related school audits that have been called “appallingly inadequate,” State Comptroller Alan G. Hevesi in January proposed legislation, already introduced in both houses, to strengthen financial oversight in school districts. Both the New York State Society of CPAs and Weitzman’s office, among others, worked closely with Hevesi on the bill, which features five major provisions, including the creation of audit committees in school districts.

Weitzman believes this audit committee, the establishment of an internal audit function, a mandatory competitive RFP process for selecting audit firms, financial oversight training for school board officials and more involvement by boards in the external audit, as called for in the legislation, are central to the prevention of future scandals.

“The fact is, what we’ve seen is that the accounting firm that performed most of these audits basically undersold the audits in terms of their fee structure and as a result really skimped on what they did,” Weitzman said. “One of the educational processes that the school districts are going to have to learn is that you get what you pay for, and they can’t entirely look at low bid as the ultimate factor in selecting their auditors. That mindset will change.”

Short of the legislation or some form of it passing, though, Weitzman said he would like to see more CPAs become involved with their school boards, volunteering their time to sit on an audit committee or encouraging boards to create one.

“The people who are involved with the school boards are extremely concerned about the educational opportunities that the children are given in the district,” said Weitzman, who’s resided in Nassau County for more than 30 years with his wife, Susan, also a CPA. “Many of them, though, really have little or no financial backgrounds, and some of them are now dealing with $150 million budgets, which are major businesses. CPAs have that experience and can bring that forward.”