Source: Sherman Publications

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Township Board changes auditor

February 15, 2012

By Joe St. Henry

Review Editor

Orion Township is switching its auditing firm, with Plymouth-based Post, Smythe, Lutz & Ziel replacing Plante Moran, its auditor for the past 12 years.

A contentious discussion on the matter took place at the Township Board meeting on February 6, before members approved the change, 5-2. Minutes before, a motion to renew the contract of Plante Moran was rejected, 4-3.

Township Supervisor JoAnn Van Tassel said the decision was made primarily to provide a "fresh set of eyes" at Orion Township's records. (The Township Supervisor worked with Post, Smythe, Lutz & Ziel in the past, when she was Lake Orion Village Manager.)

Treasurer Alice Young concurred, noting in a background memo to the board that such a fresh approach could not only "provide new ideas and knowledge, but also renew the spirit of independence."

Van Tassel said in her own memo the valuable services provided by an auditor include verifying financial transactions are being properly recorded, assuring appropriate internal controls are in place and keeping a municipality abreast of changes in regulations that affect its operations.

Prior to the votes, Trustee Neal Porter also added the township, operating in a depressed economy, must be prudent with its budget. The new auditing firm will charge $11,122 less for its 2011 audit services than the predecessor.

Township Clerk Penny Shults did not agree with the change, noting that Plante Moran's performance and "historical perspective" it has obtained during its long relationship with the township is worth the extra cost.

"In my opinion, Plante Moran has done an excellent job for the township," Shults said after the meeting. "They've played a key role in helping this township survive the economic storm of the past several years and remain financially viable.

"Just because a firm is the least expensive doesn't mean it's the best."

Shults said Plante Moran is the top auditor in the state and is working closely with Gov. Snyder and his staff in regard to new auditing standards. The firm was keeping the Township updated on the changes, she said.

The Township Clerk also stressed Plante Moran was intimately familiar with the township's accounts, funds, contracts, departments and staff, including strengths and weaknesses, as well as its record-keeping procedures.

During the board meeting, Trustee John Steimel also noted the successful track record of Plante Moran and his support of renewing the contract. He said he appreciated the firm's efforts to point out discrepancies over the years, as well as its assistance in helping the district prepare future forecasts and long-term budgets.

"I'm satisfied with the work of Plante Moran," Steimel said.

Both auditing firms made presentations during the board meeting and answered questions from the board members. Representatives from Post, Smythe, Lutz & Ziel said the firm specializes in municipal audits and currently works with 14 other local government units in Oakland County.

Plante Moran representatives acknowledged the Township may have concerns with the service provided, but said they have reached out to the Board to discuss the issues with no response. In addition to helping with future forecasting and providing general counsel, the Plante Moran representatives also noted the firm's agreement to lower and/or freeze its hourly fees in recent years.

Shults said she and her staff would fully cooperate with the new auditing firm. She reiterated, however, this is not the best move for the township. In addition to a lack of historical perspective, she thinks the new auditing firm does not offer the training and other resources that Plante Moran did.

"Plante Moran helped us stay current on best practices and other important facets of the auditing process," she said. "Now we will have to spend money elsewhere for these services."

During the meeting, Shults cited remarks from the American Institute of CPAs (AICPA), warning organizations what appears to be the lowest qualified bid sometimes turns out to cost more money and resources in the long run.

(AICPA) believes the mandatory firm rotation carries significant cost and possible unintended consequences that have the potential to hinder audit quality rather than the intended goal of enhancing audit quality, a December 2011 AICPA memo stated.

"This is a key role," Shults said. "I think this is a penny-wise, pound foolish decision by the township."