The audit results for the 2007 municipal Metuchen budget are in six months late and includes a few critical findings.

“We have an audit that says we have problems with our internal controls and the work being performed managing our funds,” said councilman Justin Manley at the Jan. 20 Metuchen Borough Council meeting. “I think it is incumbent on us to get to the bottom of it.”

The 2007 municipal budget audit was conducted by auditing firm Ernst and Young (EY, company homepage). Among its more critical findings, the audit concluded that the borough overpaid “by a significant amount” the sum due for local school taxes and over-estimated the amount in the borough’s municipal budget at the start of 2008 by close to $30,000.

The audit was also completed approximately six months late.

“The statute says that the governing body shall cause an audit of its books and accounts to be completed within six months of the close of the fiscal year,” said Manley. “This resolution is the acceptance of the audit of fiscal year 2007, so it should have been filed by the end of June 2008.”

During the meeting, councilmembers were unable to determine who was at fault for the audit’s delay.

“Obviously, there is a six month delay,” said councilman Christopher Morrison. “If there is anything we could have done to get it sooner, I think we ought to be taking steps to make it happen. What we need to do is to find out what that is and rectify it. If it was the auditor’s fault, let’s hear it. If it was our fault, then let’s work to fix it.”

Councilman Richard Weber asked why the auditor never notified the council that the audt was running behind schedule.“Why didn’t the auditor tell us that they weren’t getting the information or whatever the problem is or that they weren’t starting until June when it was due? I would like to know the answers to it. I wish we would have known,” Weber said.

The NJ Department of Community Affairs (DCA, agency homepage) has been notified that the audit came in late, according to borough administrator William Boerth.

The DCA is a state agency that provides administrative guidance, financial support, and technical assistance to local governments, according to the agency’s website.

In the Jan. 20 council meeting, the council also voted to replace EY with a new auditor, Suplee Clooney and Company, to conduct the audit for the 2008 municipal budget. However, councilmembers stressed that the change was made for reasons of cost and not because of the 2007 audit results.

“We are looking at a firm whose bid came in cheaper than the current auditing firm,” said councilman Peter Cammarano. “It is cheaper to the tune of $5,000 to maybe as high as $7,000. When we are facing budget problems and a likelihood of no state aid, this is exactly the kind of cost-saving measures we need to be taking.”

“We are going to have to save, whether it is $500 or $5,000, we need to be aware of every penny we spend this year,” Cammarano said. “I think [Suplee Clooney and Company] is reputable, and they do a lot of municipal work, as has the firm we have had previously. But when we get two proposals, and they are basically equal but one is $5,000 cheaper, it seems pretty much common-sense to me that we should go with that firm.”

“I do believe that the public needs to understand, because it does look like [EY] gave us some news we didn’t want to hear and we let them go,” said councilmember Chris Morrison. “We used Ernst and Young in 2006 and there were no comments. We then hired them again in 2007, at which time they gave us negative comments and we let them go. But I think the public should understand the reasons as to why we are doing it.”

Councilmembers also determined that the fact that the borough’s chief financial officer, Rebecca Cuthbert, was at one point in her career an employee of Suplee Clooney and Company did not disqualify the firm from now serving as the borough’s auditor.

Councilman William Waldron stressed that the council’s main objective now should be to take a “close look” at the borough’s “internal controls.”

“We have an audit that critiques our internal control systems,” Waldron said. “Regardless how you characterize it, I think we have some internal problems we have to take a hard look at, and we are going to have our own CFO’s response to this audit.”