An annual audit of Brookline’s town budget is delayed by six months, leaving town leaders worried about the effects on town finances and credit and prompting a search for a new auditing firm.
The problem stems from rapid consolidation in the accounting industry in Massachusetts that has led Brookline’s audit provider to involuntarily change twice in the last 18 months, according to Lincoln Heineman, the town’s finance director.
Brookline conducts an audit every year as a matter of municipal best practice, according to Heineman. Its most important function is to inform the credit rating issued to the town.
Brookline’s annual audit was previously conducted for more than two decades by Powers and Sullivan, a local accounting and auditing firm that specialized in municipal audits.
In February 2024, Powers and Sullivan was acquired by Marcum, a larger national firm. Nine months later, Marcum was acquired in turn by CBIZ, the seventh-largest accounting firm in the United States.
According to Heineman, CBIZ has failed to deliver a timely audit of Brookline’s finances fiscal year 2024, which ended on June 30, 2024.
While there’s no firm due date in the agreement with the auditor, the audit is typically delivered six to nine months after the end of the fiscal year, town officials say, so they were expecting to receive it by March.
“I’ve been contacting our folks there several times a week to say, where is it?” Heineman said at a meeting of the town’s Audit Committee on Aug. 20. “They keep saying, ‘We’re working on it and will be done soon … We’re doing everything we can to accelerate that and try and get it done.’”
Amy McGahan, director of corporate and strategic communications at CBIZ, declined to answer questions from Brookline.News, saying that the company “does not publicly comment on client matters.”
The credit rating agency Moody’s uses the audit to assess the town’s financial health and stability, and issue it a credit rating which helps determine the rate at which the town can borrow money, Heineman said.
“What this means for us right now is frequent communication with several different entities including Moody’s … letting them know where we’re at,” Heineman said at the August meeting, in response to a question about the immediate implications of the delayed audit.
“We’re fine right now. But we need to get it done. They need to get it done,” he said.
Brookline’s problem mirrors a widespread issue across Massachusetts right now, according to Mimi Bernardo, president of the Massachusetts Municipal Auditors’ and Accountants’ Association.
She and Heineman both described intense consolidation in the auditing industry in Massachusetts over the last few years.
Bernardo’s town of Brewster, MA where she is the finance director, is lucky to still have a local, independent auditor, she said.
“But we are the outlier. I would say most cities and towns in Massachusetts have the situation that you’re witnessing in Brookline,” Bernardo said.
The municipalities affected by the consolidation have had no decision-making ability as the consolidations happen, Bernardo said, and are “now just a number for the audit firm.”
In Brookline, the delays have triggered a push by town officials to find a new auditor.
“CBIZ is too big and too decentralized in the way it seems to be operating to be responsive to our needs and we really do need to look for an alternative,” said Lee Selwyn, a member of the Audit Committee, at the August meeting.
Heineman confirmed that the town is beginning the process of finding a new auditing firm. “We’re not in a good place with CBIZ, clearly,” he said.
The options are limited: he estimated that there are fewer than five Massachusetts firms equipped to handle a larger municipal entity like Brookline, which has a $456 million budget for the current fiscal year.
Heineman said that auditing services are not subject to the state procurement laws, so the town staff and audit committee are planning to reach out to the firms that he thinks are capable of handling its audit, interview some of them and make a recommendation to the Select Board.