LCWSA rehires accountant

By Karen Middleton
karen@athensnews-courier.com

July 24, 2008 10:17 pm

— The Limestone County Water and Sewer Authority board voted 4-to-1 against a recommendation by General Manager Tony Sneed to hire a new accounting firm to conduct the authority’s 2008 audit.
The authority had backed off an agreement with the local Christopher, Durham, Pepper and Armstrong after a controversy arose in the spring after Certified Public Accountants Cecil Armstrong and Annette Barnes found that for the first bond test ended March 31, the authority ended with a $2,610,661 deficit. The second bond test for the same period, which deducted losses in connection, tapping and impact fees and decreases in interest income, had CDPA showing a $1,629,886 deficit.
Bond tests are submitted every six months to determine a utility’s eligibility for construction bonds and determine the rates the utility must charge customers to repay the bond.
Sneed and financial controller Harvey Cooper called in a second independent CPA, Dale Fowler, described by authority comptroller Cooper as “an expert in utility accounting.”
Fowler’s figures showed a deficit of $274,992 for the first bond test and a $208,174 deficit for the second bond test.
Fowler told the board, “You’re not in a hole as bad as we thought.”
Armstrong and Barnes stood by their calculations. But Sneed and board member Alton Robinson advocated going to a new CPA firm on a regular rotation basis, instead of consistently using CDPA, as it has for the past 24 years.
Sneed sent out requests for proposals to five firms, including CDPA. Sneed recommended going with Dyer & Smith LLC of Huntsville at a cost of $5,000.
“In addition to the award recommendation, I would like to recommend that he board rotates the auditor every three years,” said Sneed in his recommendation to the board.
Other firms responding with proposals were Dale Fowler with the Fowler Group at $27,200; CDPA, $30,000; and Leonard Gossett’s MDA Professional Group of Athens, $32,000.
One of the criteria was at least 10 years experience in auditing utilities.
While Dyer & Smith does not have 10 years utility experience, Sneed said he had experienced being sued when he worked in Mobile because of not taking the low bidder.
Authority legal counsel Mike Cole said professional services are not covered by the state competitive bid law.
“It doesn’t apply to professional services,” said Cole. “Whomever you choose should be someone you’re comfortable with.”
Board Chairman Mark Yarbrough expressed impatience with continued discussion of the matter.
“Let’s quit Mickey Mousing around,” said Yarbrough. “We’ve dragged them (CDPA) long enough. We told them they had the job, then we rescinded it.”
Sneed asked the board if he could “speak candidly” and Yarbrough encouraged him to go ahead.
“We paid $60,000 last year for an audit, which is way above what we should have paid,” said Sneed. “It doesn’t do any harm to rotate out or have new auditors. There’s nothing wrong with CDPA. Just because they’ve always done it is no reason to have them do it this time.”
Sneed spoke of “tension” between CDPA and the comptroller.
“There is always tension between the auditor and comptroller,” said Yarbrough.
Robinson moved to table the recommendation, but his motion failed for lack of a second. Board member Paul Wilson moved to hire CDPA because they were the lowest price while still meeting the requirement of at least 10 year’s experience in utility auditing. Yarbrough seconded the motion. The measure passed on a 4-to-1 vote, with Robinson casting the sole dissenting vote.
Cooper predicted when he gave his financial report that the first bond test at the end of the year would show a $100,000 deficit and the second would pass.