Walsh was warned in ’14 of city accounting woes
Three years before an IRS audit found sloppy accounting that led to $1 million in penalties, a letter sent to Mayor Martin J. Walsh by the city’s top fiscal watchdog warned of “insufficient attention” to city finances and called for more frequent reviews to save taxpayer money.
But Walsh defended his administration’s attempts to scrub city books and pushed back yesterday on calls for state Auditor Suzanne Bump to examine the school department’s accounts.
After a week of escalating controversy following the release of an audit showing that school officials had improperly accounted for thousands of dollars in student activity funds, Walsh announced Thursday the city will hold its own audit of those funds, which are collected from parents and other donors.
The law firm Ernst & Young, which has a standing contract with the city for special projects, will audit all student activity accounts at the city’s 130 schools.
But at the start of Walsh’s first term, the city’s independent Financial Review Commission had written the new mayor and suggested a deep dive into city funds. The letter, sent by Boston Finance Commission Executive Director Matthew Cahill to Walsh’s office in February 2014, laid out a list of improvements the new administration should take on. Ordering more frequent and probing audits was one top recommendation.
“The FinCom believes that insufficient attention is paid to many of the city’s processes and agreements which continue without any systematic program of review and evaluation,” the letter reads. “A regular program of audits should not be seen as a negative but rather as providing the city with an established institutional opportunity to allocate taxpayers’ dollars in the most effective and cost-efficient manner.”
Cahill told the Herald yesterday audits help “establish benchmarks.” Even though it’s a municipal government, the city is “a business — we’re trying to do the most with the money we have and we’re guardians of taxpayer money,” he added.
Walsh didn’t remember receiving the letter but said his administration has completed audits of numerous departments, including the police and fire departments, and that the schools were looked at — but the focus wasn’t on finances.
“We’re in a constant theme of audits. We actually did an audit of the school department as an organizational audit — we didn’t get into the fine-tuning of what’s going on in the budget,” Walsh said, adding that the improper accounting that led to IRS penalties was “a very unique situation.”
And Walsh dismissed a letter from state Reps. Shawn Dooley (R-Norfolk) and Shaunna O’Connell (R-Taunton) to Bump’s office, asking her to launch an investigation into BPS, blasting the legislators for not giving Boston and other areas more education funding in the state budget.