Officials Offer Reassurance About Bell Auditors' Culver City Work

Culver City Chief Financial Officer John Muir was feeling a little frustrated.

"I have a feeling that what happened in Bell is going to affect everyone in California," he said about the latest fallout from the springtime scandal in which Bell city officials were found to be grossly overpaid and allegedly raiding city coffers.

On Dec. 21, the office of State Controller John Chiang released a report that was highly critical of accounting firm Mayer Hoffman McCann P.C., which audited Bell's finances, thus allowing the irregularities to continue. 

Culver City also had a contract with Mayer Hoffman McCann to audit the city's Redevelopment Agency, and the next day the city released a press statement saying that its contract with the firm had just run out and that it was getting ready to open bids for a new auditor. The city also said that it would hire an additional auditor to review the city's relevant Redevelopment Agency finances.

"While none of the members of the audit team from MHM that performed the audit of Culver City and [its Redevelopment] Agency worked on the city of Bell's audits, it is understandable that there may be some concern from the community," read the statement from the city manager's office.

Mayer Hoffman McCann released its own statement Thursday saying that the state report is inaccurate and that the firm was deceived by the city of Bell.

As the Culver City contract with MHM has run its course, the city will be putting out a request for proposals to find a contractor for the regular audit process of the Redevelopment Agency, as required by state law. But neither Muir nor Culver City Councilman Scott Malsin would say whether the city would rehire Mayer Hoffman McCann.

"We're in a situation where we don't have to be [considering dropping the company] just because the contract has run its natural course," Muir said.

Both Muir and  Malsin pointed out that it has not been proven that the accounting firm engaged in any inappropriate activity in its work for Bell. 

"I think it would be very premature to make some kind of conclusion," Malsin said.

Muir said he had been "very impressed" with the work the Mayer Hoffman McCann auditors had done for Culver City. "I have nothing but good things to say about them. This other thing is very unfortunate," he said.

Muir also pointed out that the review audit will be specifically focused on the city's Low and Moderate Income Housing Development Fund, which came under fire last fall thanks to a report from the state Senate Outcomes and Oversight Committee.

"We just want to clear the air," Muir said, emphasizing that city officials have gone on record saying that they don't believe they have done anything improper in the handling of the special fund to develop affordable housing in the city.

Muir expects that it will take a couple of months, at least, to get bids from potential auditors, review the bids, approve one and see the work begin.  He has already made a few calls and requested bids by the end of next week. He said the city manager can approve the expenditure without bringing it before the City Council if the amount is less than $30,000.

Added Malsin, "I'm very confident that the firm we will bring in.... will confirm our compliance with California guidelines and will show the same thing as MHM's audits also. What we all want is to have that assurance, to have that audit that shows we are operating at the very highest standards."

Although Malsin and Muir understand that residents might automatically associate potential wrongdoing by the audit firm with inappropriate behavior on the part of the city, both insist that the city is behaving properly, and a transparent process will demonstrate that. 

Malsin, while specifically pointing out that he's not making any comment on Mayer Hoffman McCann's innocence or guilt, compared the situation to being scrupulous about providing one's accountant with complete and accurate information, and then finding out that the accountant has been accused of improperly handling someone else's taxes.

"If for some reason, that individual gets tied up in some questionable activity, whether it's their fault or they were deceived, does that mean you have been less than forthright with your documents? It honestly does not," Malsin said. 

Muir, for his part, recognized that the situation will involve more work for him and his department.

"It's what we're going to have to do to continue to hold the public's trust," he said.