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The Buzz 9/27/12

AG Snubs City’s Audit Process The selection process for an accounting firm to audit the city of Pensacola’s financial statements was filled with controversy—council challenges, tie votes, protests, a motion to reconsider and now this opinion from the attorney general.

In a Sept. 19 letter to the city, Florida Attorney General Pam Bondi informed officials that the original request for proposal (RFP) for an audit firm that was created by City Finance Director Dick Barker and found to be defective could not be made valid by an approval by the council’s audit selection committee.

By law, the audit committee is required to create the RFP for the annual financial audit. Instead, Barker created the factors to be used in evaluating the audit services, thus invalidating the RFP. Once the RFP was issued, the audit committee couldn’t simply make it valid by approving it after the fact.

The audit issue came to light during the Pensacola City Council’s May 7 Committee of the Whole meeting when Councilwoman Maren DeWeese brought up the audit committee. She argued that the committee—not solely city staff—should have input into the RFPs and also felt that the committee’s composition should be reevaluated.

“It’s for us to appoint the entire committee, it is our decision,” the councilwoman said. “This is a legislative function.”

In February, the city council had approved selecting an external auditor and the RFP process. It voted that the audit selection committee was to be comprised of: a council member, the city’s chief financial officer, a member of city staff and a citizen appointed by the mayor. The RFP was similar to the one used in 2007.

Prior to the May 7 meeting, DeWeese had laid out her argument in a series of letters to city administration. She contended that the current committee composition could potentially present a “taint to the auditor selection process” and requested that the RFP process, which began at the end of March and wrapped up earlier this month, be reassessed.

“If the process moves forward before council takes up the issue, I consider this to be an example of management override of internal controls …” DeWeese wrote.

In a May 7 letter to the council, City Administrator Bill Reynolds confirmed that the “audit selection committee should have input into the requirements of the RFP per state law,” but said “all substantive elements that the statute outlines are included in the RFP. The procedural defect in the action as outlined by the councilwoman can be easily cured by having the constituted committee ratify the actions previously taken.”

Although City Attorney Jim Messer agreed with Reynolds and said the situation could be remedied by ratifying past actions, several members of the city council were hesitant to bless the already-commenced RFP process. They instead favored starting the process over with a new RFP.

“Basically, we did not follow our policy, is that correct?” said Councilman Larry B. Johnson.

“Most of the requirements of the law have been followed,” Messer said. “However, if you’re asking me if all the requirements of the law have been followed, then no.”

“If we don’t ratify it as you just said, we’re really setting ourselves up for a legal challenge,” Johnson said, anticipating responses from firms already engaged in the RFP process.

To support his May 7 advice to the city council, City Attorney Messer had cited the case Frankenmuth Mutual Insurance v. Magaha. In that case involving Escambia County Clerk of Court Ernie Lee Magaha, the Florida Supreme Court considered whether the county commission could ratify a contract that Magaha had executed without authority. The Court determined the Escambia County
Commission had the power to approve the agreement after it was executed.

Bondi determined the Frankenmuth ruling didn’t apply because of the special statutory requirements placed on the audit committee. She wrote, “It is questionable, moreover, whether the audit committee’s statutorily prescribed functions may be delegated to the financial officer. Absent statutory authority, the discretionary authority of a public official or entity may not be delegated to a subordinate.”

The Long Search The Pensacola City Council may be a bit closer to finding its long-awaited executive staff person. After meeting recently to discuss three finalists for the position, Council President Sam Hall and Councilwoman Sherri Myers decided to present the candidates to the entire board.

The most recent twist in the council’s search for a council executive was the body’s decision to turn to an employment agency for a supply of qualified applicants. Hall and Myers had both interviewed the top three from the agency’s pool, which made it awkward when the council president threw a fourth candidate on the table during the pair’s Sept. 21 meeting.

“It’s been two years,” protested Myers, “and this would just be changing the process again.”

The process of finding a suitable executive has flailed in the past, with pools of candidates being ditched. The meeting to discuss the top candidates had been set up after Myers requested that the council move the process along.

“And now we’re bringing up someone named David Bailey and I have a feeling there’s a little bit of backdoor politicking going on here,” Myers said.

Hall said that he had recently spoken with Bailey—currently the city manager in Seaside and formerly Pensacola’s CRA head—and thought he’d be a good fit for the position.

“There is no hidden agenda here,” the president said. “I just don’t want to miss the opportunity to put the very best candidate in.”

Myers said that she, too, had been approached by people interested in applying for the council executive position. Though she considered them to be “highly, highly qualified” for the post, she turned them away because the selection process had already begun.

“The process is closed,” she said. “It’s too late.”

Members of the public also took issue with adding Bailey to the mix. They complained that the process had gone on too long and singled Hall out as delaying it on prior occasions.

“I don’t remember clogging it up three times, just twice,” he told them. “And I apologize for that.”

Councilwoman Megan Pratt, who attended the Hall-Myers meeting as a member of the public, told her fellow council members that she had heard of the Bailey possibility “through the grapevine” and considered him to be a “straight shooter.” She said she could support a six-month trial stint, and maybe more.

Pratt rejected Hall’s suggestion that a decision be delayed until newly elected council members are seated.

“They get on in the middle of November, then there’s Christmas, the there’s blah, blah, blah,” she said. “I don’t want to wait. I want to get this person here.”

Another council member in the gallery, Brian Spencer, said Bailey—who he previously had a working relationship with—had a “level of experience that is hard to replicate,” as well as “institutional knowledge,” but then argued for the sake of the process.

Charles Bare, who will soon take Hall’s council seat, said he was “flabbergasted” with the executive search thus far and also suggested that the council stick with the current process due to the “terrible message” altering from that course would send to citizens. He noted that if council didn’t accept any of the three finalists, it could then reopen the pool for anyone—including Bailey—who wished to apply.

The three finalists for the council executive position are Dr. Lila Sams Cox (who works with the SRIA), David J. Murzin (a former state legislator) and Dana L.S. Williams (former Clerk of Court in Destin). Hall had whittled that list out of a five-candidate pool provided by the Landrum employment agency. Hall and Myers will have an expanded conversation on the subject with the full city council soon.