Add Chuck Johnson and the folks at WXXV to the party: A Bay St Louis Financial Disaster Update

What can I say folks but in respect the recessed meeting of the Bay St Louis City Council was a bit of a zoo but first a comment bump:

You will note that it is incontrovertible: Reed has passed the point of no return, for no longer are the serfs laughing with him, they are now laughing at him.

I thought of Empire Parish a couple of times when the assembled crowd openly laughed, hissed and cat called on a couple of occasions when City Clerk Kolf or Hizzoner told a whopper. We had Hizzoner bring in the Hancock Bank Bond Trustee to finger wag and lecture the City Council. Best of all though is those assembled last night saw the City Council well discharge its fiduciary duties to the voters and taxpayers of Bay St Louis.  The Mayor, OTOH, came very close to losing it after he did not get his way in continuing the taxpayer funded spending binge he has been on for the last five years.

First up is WLOX and Al Showers because I heard early this morning that I was on the TeeVee though there is no link to any Bay St Louis reporting on the WLOX website. I figured since Al was filming the crowd…..

and

Did I mention WXXV Fox 25 had a reporter at last night’s meeting? Competition among journalists is a good thing for public interest journalism and I for one was very happy to see another TeeVee media outlet cover Mayor Fillingame’s financial disaster besides WLOX. So I introduced a couple of people, including myself, to the WXXV reporter to make sure he felt properly welcomed to the party. Someone that has been around for a while now is Justin Mitchell from the Sun Herald and he was the first guy out with a story on last night’s city council meeting:

Bay City Council, mayor at odds over auditor’s draft report ~ Justin Mitchell

I think I understand the auditor’s opinion rendered based upon what I heard during the presentation given by the City’s outside auditor Jennifer Bell.  A Disclaimer of Opinion is plenty bad but not necessarily a rare audit opinion. The only thing worse would be a Disclaimer that contained Going Concern language and I think that is the case here despite Bell’s best efforts to minimize the severity of the situation before the public. The audit is very soon to be released to the public so I will reserve further comment until I have had a chance to look at it in full.

Finally the oldest of the old City of Bay St Louis media salts may have had the very best idea of the evening, which he conveyed to me on twitter starting my morning off the right way in the process:

Chuck, the next meeting is tonight. Hope to see you there!  :-)

Stay tuned.

7 thoughts on “Add Chuck Johnson and the folks at WXXV to the party: A Bay St Louis Financial Disaster Update”

    1. Not too much dispute in most quarters which side Deferred Revenue goes on. On the other hand to the average non accountant it probably is read like “money we will receive later.”

      As far as the BSL liabilities it is quite clear what some of the biggest are, even without reading the audit.

      As far as the going concern opinion: when the government has as many ways to raise taxes and fees and shift expenses to the future by borrowing without the citizens being able to stop it in the short run, then all the creditors probably get paid with their contractual interest in the end.

  1. Doug,
    I admittedly do not possess the credentials you have to critique the auditor’s report to the city officials in the Bay, but I would liken it to this:
    A patient with a mouthful of dentures goes to his dentist asking for a flossing demonstration, and the Dr. of course says he can’t do it. For one thing, it’s too late, and you have nothing to work with.
    That is what I got out of Ms. Bell’s presentatin when she told them no opinion on how to manage their money was possible because they have none ( teeth for example).
    David Kolf should have been relieved of his duties immediately last night when Councilman Boudin got him to admit publicly that he lied about the city’s finances concerning the check from the State Tax Commission on Gaming Devices that did not belong to the city. When Boudin cornered him about putting it in some revenue account, and reminded him that the check was for $132,000, and the Auditor had just minutes before told them they only had $35,000 in the bank; “Therefore,” Boudin tells him, “you have spent it haven’t you?” And Kolf said “Yes, we have.” Hope one of those media outlets gets this to the appropriate state agency.
    No financial officer of any business (Kolf) who was caught lying to the Board of Directors (council) would still be there today.
    Only in the government.

    1. A Disclaimer is kinda like the 1988 Sugar Bowl or as Keith Jackson used to say, “like kissing your sister”.

      As a CPA/Auditor and expert in this field I’ll say is WWHG was well within the guidance and what I consider the bounds of considered professional judgment disclaiming opinion. And doing so allowed them to stay out of the political battle between the Mayor and Council. BUT….

      To the general public, it is a cop-out and I understand why people feel that way. Technically, the audit firm could have qualified their opinion for a scope limitation related to the lack of a plan for dealing with the uncertainty caused by the going concern problems as well as the going concern problem itself. That certainly would not have been well received by the Administration.

      By withholding information and not addressing the totality of the City’s financial problems, Hizzoner gamed the audit process. WWHG took the easiest path out.

      Ms. Bell said WWHG has done the City’s audit since 2007. In Mississippi K-12’s, an audit firm is allowed only three years before the School District must rotate their auditors. IMHO it would be a good idea for the City to have another audit firm come in for a few years and establish an audit rotation. Nothing against WWHG but auditor rotation is an established best practice even as it remains controversial within the auditing profession.

      http://www.nysscpa.org/cpajournal/2005/105/essentials/p36.htm

      http://www.pwc.com/us/en/point-of-view/assets/mandatory-audit-firm-rotation.pdf

      I’d have no more than 5 firms submits RFPs. Price should be considered but only as part of the total evaluation. There are several very experienced governmental qualified audit firms within a 90 minute driving distance of the Bay.

  2. It will be interesting to know what the outcome was after the council went into executive session last night to discuss Mr. Kolf’s lies to them.
    He should be dismissed immediately. The council should take the city back and pull all responsibility away from the mayor.
    It is time for the council to take this opportunity and be responsible to the people of Bay St. Louis.
    If they don’t do this then the city is doomed and we all need need government.
    I was glad to see we have at least 3 officials on that council that care.
    The other 4 are worthless and need to be buried with the Mayor.
    There is currently a group of citizens gathering now to select new people to run for those positions. The people of this city are tired of the lies and incompetence currently in our administration.
    Watch out wards 1,2,3,4 your seat is in jeopardy .!!!

  3. I have seen comments that suggest the council should fire Kolf, well they don’t have that power. I think not only a change of faces in some wards is necessary but I also believe that a change in the form of government is necessary to take some of the power from the hands of the Mayor and back into the hands of the council. Waveland’s Mayor/Alderman seems to be balance the power between the mayor and board. Just my opinion and open to debate. I am always open to better ideas.

  4. Thank you John
    Whoever has the authority should take action against Mr. Kolf.
    The mayor has already thrown him to the wolves.
    Maybe he should see the light and realize his potential liability in this situation with the money before charges are brought against him from state government for mishandling funds??
    Then let’s see if Mr mayor comes to his defense.
    We do need new faces on the council…

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