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Dewey auditor severs ties with town

Committee fast-tracking search for new firm
March 20, 2019

Auditing firm TGM Group has terminated its professional relationship with the Town of Dewey Beach.

In Feb. 19 letter to Dewey’s audit committee posted on the town website March 20, Herbert J. Geary III of TGM Group wrote the firm would no longer render services and has no work in progress with the town.

Town Manager Scott Koenig said TGM Group has audited the town’s financials since at least the 2014 fiscal year.

“TGM’s voluntary termination of the professional relationship is unfortunate in my opinion, but I understand their reasons,” Koenig said. “The audit committee will need to move more quickly than previously planned so they can recommend a new audit firm in a reasonable amount of time to conduct the March 31, 2019 audit.”

TGM Group partner Roy Geiser, who worked with the audit committee on last year’s agreed-upon procedures report and audited financials, could not be reached for comment.

While some audit committee members wished to replace TGM Group immediately, the committee decided at its Feb. 9 meeting to have TGM Group audit the town’s 2019 fiscal year statements and voted 4-2 to seek a new auditor for the 2020 fiscal year.

At the time, Chair Julie Johnson said there would not be enough time to hire a quality firm to audit the town’s 2019 financials. Now, with TGM Group’s resignation, the committee must fast-track hiring a new firm.

Koenig said a Feb. 28 meeting was held with Johnson, Geary and Geiser to discuss the upcoming audit and emails sent to TGM Group from Commissioner David Moskowitz and Dewey Citizens for Accountability that questioned the firm’s ethics and procedures.

“[Herb] Geary said they had discussed the matter with its liability insurance carrier, who recommended they drop us as a client because of the atmosphere, and it just wasn’t worth the effort,” Koenig said.

It was at the Feb. 28 meeting that Koenig said he gave Johnson the original, unopened letter from TGM. Johnson said that was the first time she learned about the letter or about TGM Group’s intention to resign.

Johnson said TGM Group agreed to reconsider its decision to resign.

”I called Geiser on the morning of the 11th or 12th asking if they had made a decision, and he indicated that Geary would be in touch with me about it,” she said. “I then received the email confirming the resignation from Geary on the 12th.”

Commissioner and audit committee liaison David Moskowtiz said he was not told about TGM Group’s resignation until March 15, and he was not provided with a copy of the resignation letter until March 20.

“The town manager was made aware of TGM’s resignation a month ago based upon a letter dated Feb 19, but improperly withheld this information from the commissioners,” Moskowitz said.

Moskowitz said as a certified public accountant and a chartered financial analyst, he has had issues with TGM Group’s performance. He said auditors should be independent and objective; he also said the town manager should not be the one to select the auditor.

“I have faith in the audit committee conducting a proper RFP to find a better auditor for Dewey Beach,” Moskowitz said.

Koenig said there was no conspiracy to withhold the letter. He said TGM Group did not confirm its resignation until March 12, at which point he contacted Town Counsel Fred Townsend on how the audit committee should move forward, since a vote to approve an RFP for a new auditor was not on the agenda. The agenda was amended March 19 to include a possible vote and TGM Group’s resignation letter.

Dewey Mayor TJ Redefer said the news of TGM’s resignation was disappointing. “We now need our volunteers in the audit committee to work even harder to find us a new vendor as soon as possible.”

Audit committee meetings have proved contentious since an Aug. 3 meeting resulted in two committee resignations and an arrest. Controversy continued in December, when the former chair produced revised minutes for the Aug. 17 meeting. In February, a man arrested and later exonerated for theft of an audited document filed a federal lawsuit against town officials.

The audit committee will next meet at 10 a.m., Saturday, March 23 at the Lifesaving Station, 1 Dagsworthy Ave.