Preston auditor cancels contract, town audit not done
Firm abruptly terminated its services, alleging it didn’t receive requested financial data
Preston — The town is scrambling to find a new firm to conduct the required audit of the 2019-20 fiscal year after the contracted audit firm abruptly terminated its services, alleging the town failed to provide repeatedly requested financial data.
“Effective as of the date of this letter, we will cease our services as your accountants,” certified public accountant Sandra E. Welwood wrote in a Jan. 25 letter to the town. “Therefore, we are unable to continue audit services for the year ended June 30, 2020. We have reached this decision reluctantly and after substantial deliberation because of your failure to provide us with required financial information (primarily on the Town side) for us to perform our audit procedures.”
The Board of Finance held an emergency meeting Wednesday night to discuss the letter, and members expressed shock, disappointment and confusion about the firm’s decision. Board Chairman John Moulson said he had no inkling that delays in obtaining financial data remotely due to COVID-19 had led to “a pending disaster.”
“She did not have numerous communications with me,” First Selectwoman Sandra Allyn-Gauthier said. “And I’m very disappointed she didn’t reach out to me by phone to have a conversation, and I certainly
wasn’t made aware that she was contemplating that our audit services were in jeopardy and that she was terminating them.”
Finance board Vice Chairman Robert Congdon said he called Welwood eight times since the town received the letter and received no response. He emailed her three times “begging” her to reconsider. In an email response, she told Congdon she had asked repeatedly for information and did not receive it.
Town Finance Director John Spang attributed the problem to the COVID-19 closure of Town Hall, with some staff, especially town Treasurer Susan Nylen, working remotely, and the difficulty in providing the requested financial documents electronically. Spang said past in-person audits have been smooth and quick.
“The process has changed,” Spang said. “We’ve all tried our best to comply with it, and we haven’t been able to in a timely fashion.”
The town has obtained two 30-day extensions on the normal Dec. 31 deadline from the state Office of Policy and Management, with the audit now due Feb. 28.
Welwood could not be reached for comment Thursday.
Welwood’s firm, Sandra E. Welwood LLC of Danbury, has been doing the town’s annual audits for the past 10 years and currently was in the second year of a three-year contract. On Oct. 24, Welwood sent an email to the town announcing that all audit work would be done remotely due to COVID-19 precautions. She sent a lengthy list of requested documents, financial statements, grant information and expenditures for the audit set to begin Nov. 23.
“After many phone calls, we still did not receive the information on the Town side,” Welwood wrote in the Jan. 25 letter. “As of Jan 5, 2021, we still had not received information and again emailed to request the missing information be provided no later than Jan 15, 2021. As of the date of this letter we have received nothing.”
Finance board members have requested copies of all correspondence between the firm and town officials to track the chronology of the requests and responses. The firm’s annual fee for combined town government and school system annual audits is $27,250. But Chairman Moulson said any future legal or financial recourse over the canceled contract would have to wait for the more important immediate task of finding a new audit firm at a time when firms are busy with year-end audits and preparing for tax season.
Moulson, Spang and board members Robert Congdon and Denise Beale will contact several state accounting firms that handle municipal audits and gauge interest and potential prices. In an emergency, the town can waive the lengthy process of obtaining bid prices for auditing services.
Moulson said he would call a special Board of Finance meeting soon to discuss the group’s findings.
Preston is far from alone in needing an extension on required annual audits. Spang said an OPM official told him some 300 entities required to submit annual audits have sought extensions.
OPM spokesman Chris McClure said Thursday that 79 cities and towns have requested extensions on the audit filing deadline. The state does not keep track of reasons for the requests, he said.
In addition to Preston, 10 New London County municipalities have requested audit extensions: New London, Norwich, Bozrah, Colchester, East Lyme, Griswold, Lebanon, North Stonington, Sprague and Stonington.