The Indianola Board of Aldermen essentially called the bluff of a former CPA contractor this week.
The board, during a special call meeting this past Monday night, voted 4-1 to move on entirely from Brown, Ewing & Co. despite the fact that the accounting firm may possess documents that could be deemed beneficial by the city’s new audit firm Tann, Brown & Russ Co.
Brown, Ewing & Co. was fired last year by the board for allegedly failing to live up to its end of a five-figure contract to complete the 2018 audit.
That was just as well to Ward 1 Alderman Gary Fratesi, who was not thrilled with the 2017 audit that was completed and turned in by the company.
“That was the biggest joke of an audit I’ve ever seen,” Fratesi said during Monday night’s discussion.
When the city fired Brown, Ewing & Co. in 2022, the accounting firm sent an invoice to the city for $30,000, claiming 75% of the 2018 audit had been completed.
“I called him at that point, and I said, ‘Can you send me something that verifies or justifies the work that you’ve done so that we can pay you? It’s not just the right thing to do, it’s the legal thing to do. We cannot draft a $30,000 check when there’s absolutely nothing to show for it,’” Board Attorney Kimberly Merchant said Monday night.
Brown, Ewing & Co. Partner David Ewing Jr. told The Enterprise-Tocsin after Monday night’s meeting that during the process of attempting to complete the 2018 audit, there were several meetings with the city, in which he thought it was agreed the firm would complete the work after last tax season. Ewing said he estimates as much as 80% of the audit was complete.
“I think one of the big sticking points was trying to get a copy of the master lease, where they had bought several vehicles, and we never could get a copy of the master lease,” Ewing said. “I’m sure they’re making payments on that master lease as we speak…I think the relationship went sour for whatever reason, but it is what it is.”
After mid-April of 2022, Ewing said his firm reached out to the city and was notified the contract had been terminated.
“It really didn’t end on a good note,” he said.
Merchant said she did not receive any of the requested documentation back in 2022, and the city did not pay the invoice.
It seemed the two entities had resolved to move on. That is until Scott Hodges, partner at the new accounting firm reached out to Brown, Ewing & Co. and requested the 2017 work papers so that he could get started on the 2018 audit.
“He made that request and spoke to Mr. (David) Ewing who then told him that he was not going to produce the 2017 work papers until we paid the invoice that he had submitted for the incomplete, never received audit from 2018,” Merchant said.
Merchant said that it is common practice for accountants to share that information in these kinds of situations, but Brown, Ewing & Co. has decided to play hardball.
Ewing told The E-T the work papers belong to his firm, and he also stated that he was not optimistic the new firm could get much done without them.
“The work papers that we have belong to the auditing firm that does the audit, and if the city thinks the new accounting firm can do the audit without our work papers, then that’s fine, but in my opinion, that’s going to be impossible for that to happen,” he said.
Merchant presented the board with two options.
One, the city could vote to authorize her to negotiate a lower price with Brown, Ewing & Co., with the understanding the firm would provide the 2017 work papers and the account would be settled.
Two, the city’s new accounting firm must start from scratch, which would mean some extra work and extra cost, but there would be zero negotiations with Brown, Ewing & Co.
“He’s ready to move forward. He can work around not having the work papers,” Merchant said of Hodges and the new firm. “It’s just not the most ideal situation that an accountant would like to start at.”
Ward 4 Alderman Marvin Elder cautioned the board against the second option.
He suggested the city should make another attempt at negotiating with the former company. He also later warned against making them too low of an offer.
“I just hope that we’re not low-balling this minority business,” Elder said. “I think we need to be careful with what we’re doing.”
Merchant said she was good with either decision, but she rejected the notion that she was low-balling Brown, Ewing & Co.
“We don’t know what they did,” she said. “I’m not trying to low-ball a minority business. All I want them to do is send a (detailed) invoice.”
With all five aldermen in attendance, Fratesi made the motion, and the vote was 4-1 in favor of leaving Brown, Ewing & Co. in the rearview mirror and paying the cost to start from scratch.
The lone nay vote with Elder’s’.
Elder told The E-T on Wednesday that he believes Brown, Ewing & Co. have provided the city a quality service, and he does not think it wise for the city to refuse to pay its bills.
“The City of Indianola should not set a precedent by not paying our bills,” Elder said. “This firm has done the work and submitted a bill. The city has not paid the bill. I do not support not paying our bills. I also do not support asking our attorney, which will add additional costs, to make an attempt to negotiate this professional firm’s bill downwards. I do not think this is right and that is why I voted nay. The City will incur additional costs to pay the attorney to ask another business to lower their costs. In my opinion that’s not good business.”
