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Firm that audited Bell's books hit with disciplinary charges

May 24, 2012 |  3:39 pm

Former Bell official Robert Rizzo
The state filed disciplinary proceedings Thursday against a prominent accounting firm that failed to detect any financial irregularities in Bell, where former city leaders now stand accused of looting the town’s treasury as it teetered on the edge of bankruptcy.

Mayer Hoffman McCann, which audited the books for dozens of cities in California, could be fined $1 million and lose its license to practice in the state. The firm has asked for a formal hearing before an administrative law judge.

The accusation by the Board of Accountancy follows a December report from the state controller that excoriated Mayer Hoffman’s work in Bell, calling its audits little more than a “rubber-stamp.”

The auditing firm repeatedly gave a clean bill of fiscal health to Bell, where eight former city leaders now have been charged with public corruption.

Lauren Hersh, spokeswoman for the board, said individual auditors could also be disciplined, but that would have to take place under a separate accusation.

The 13-page accusation charges the firm with repeated instances of negligence and lack of documentation for the year ending June 30, 2009, the one year the board chose to examine.

“Obviously, we hope this is the next and final step in resolving the Bell matter,” said Joe Crivelli, a spokeswoman for Mayer Hoffman firm. “The firm is working really hard to make sure what happened in Bell doesn’t happen again.”

The accusation also provides more ammunition for a lawsuit Bell could file against the auditing firm.

“People have been quick to blame the residents for the deep rooted corruption, but the reality is that the agencies in place to prevent corruption, like this audit firm, continually ignored red flags,” said Bell Mayor Ali Saleh. “These agencies should not only share the responsibility but the financial burden as well.”

The controller's report said Mayer Hoffman failed to comply with 13 of 17 “fieldwork auditing standards.” when reviewing Bell's books in the 2008-09 fiscal year. Had it fulfilled those standards, “it would have led them to identify some -- if not all -- of the problems,” Controller John Chiang said when the report was released.

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-- Jeff Gottlieb

Photo: Former Bell City Administrator Robert Rizzo walks toward Los Angeles County Superior Court in September. Credit: Brian van der Brug / Los Angeles Times

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