The Pensacola City Council took over in May the selection process of the audit firm for the city’s annual audit. Instead of having the city’s finance director, Dick Barker, on the committee, the council replaced him with a CPA from the community.
Two people were nominated for the CPA spot. Scott Egstad, a partner of Sumlin Egstad & Company, was the only one with an active Florida CPA license so he was selected unanimously by the council, according to its minutes. The other nominee. Danielle Lantz, withdrew her name.
Egstad was nominated by Councilwoman Maren Deweese. On his nomination form, Deweese described the nominee’s qualifications:
“Scott is a partner with Sumlin, Egstad & Company LLP with extensive experience in governmental and not-for-profit auditing.”
See nomination: Committee Nomination Agenda Item
RELATIONSHIP WITH O’SULLIVAN
According to council minutes, Egstad did not tell the council that Sumlin Egstad & Company had performed audits for a company associated with Mort O’Sullivan of Warren Averett O’Sullivan Creel—- Agri-Source Fuels, LLC (Agri Fuels 2011). The audits were done for 2009 (2009 Single Audit Report ) and for 2010 (2010 Single Audit Report ) to comply with Florida Farm to Fuel Grants. The date on Sulmin Egstad & Company’s cover letter for the 2010 Single Audit Report is Nov. 30, 2011.
Mort O’Sullivan was the managing partner for O’Sullivan Creel and now heads the Florida offices for Warren Averett O’Sullivan Creel, a firm that was the audit selection committee’s top choice to be the auditor.
Egstad’s firm may no longer do audit work for companies tied to Mort O’Sullivan or his firm Warren Averett O’Sullivan Creel. This may be the only work that Sumlin Egstad & Company has ever done with companies tied to Mort O’Sullivan, O’Sullivan Creel or Warren Averett O’Sullivan Creel.
However, the Pensacola City Council should have been told of the relationship prior to his appointment.
POSSIBLE ‘TAINT TO THE AUDITOR SELECTION PROCESS’
After all, it was Deweese who questioned the make up of the audit selection committee because it could potentially present a “taint to the auditor selection process.” (Independent News, “The Buzz,” May 17)
Such issues can come up with active CPAs in such a small town as Pensacola. Egstad and his firm may have or had similar relationships with other finalists. He should have disclosed all of them so that the council could have made an informed decision.
I wrote about the controversies surrounding the audit selection on Friday – Attorney General and how the City Council picked its audit firm.
The recommendation of Warren Averett O’Sullivan Creel was challenged by Saltmarsh. The committee had a tie vote on the protest and confirmed its initial recommendation, only to have the Pensacola City Council reject in July Warren Averett O’Sullivan Creel and give Saltmarsh a one-year extension. The following month, a motion to reconsider the extension failed 3-4. Deweese, Sherri Myers and Megan Pratt were on the losing side. John Jerralds and Larry Johnson were absent for the vote.
EGSTAD FOUGHT FOR WARREN AVERETT O’SULLIVAN CREEL
According to the report by Pensacola Digest on how the audit committee handled Saltmarsh, Cleaveland and Gund’s protest of the recommendation of Warren Averett O’Sullivan Creel (Pensacola Digest, “Audit committee rejects selection protest,” June 23), it was Egstad that fought for the O’Sullivan firm:
“The reason I picked Warren over Saltmarsh is because Warren Averett had experience in the last five years with eleven municipalities and Saltmarsh had only experience with two, including the City of Pensacola. The longevity issue didn’t have any part in my choice.”–Egstad, source: Pensacola Digest
When Egstad and fellow committee members Lara McKnight and Max Watson forced the tie on the motion to change the recommendation to Saltmarsh, Egstad made the motion to confirm Warren Averett O’Sullivan Creel as the recommendation and Saltmarsh as second choice. The motion passed 4-2, with chair Diane Mack and Councilwoman Megan Pratt voting against it.
I checked with Derek Cosson, Public Information Officer for the City of Pensacola, he said that, according to the city clerk, none of the audit selection committee members signed an oath or completed disclosure forms. The audit selection chair Diane Mack is out of town.