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Harrisburg nearly caught up on auditsFirm helping city build internal accounting capacity

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It was nearly a year ago that Harrisburg finally completed its 2009 audit.

Since then, the financially impaired capital city has caught up on its 2010 and 2011 audits.

And its 2012 audit, which the city is preparing for now, is expected to be done around mid-October, said Fred Reddig, special assistant for Act 47 and local government affairs at the state Department of Community and Economic Development.

"Up until this year, there really hasn't been any accounting staff," said Carol Roland, a partner with Trout, Ebersole & Groff LLP, a Manheim Township-based accounting firm that has helped Harrisburg prepare documents and address the backlog while training new city accounting professionals.

The goal has been to build internal capacity for the city to operate more efficiently and be able to handle the work that needs to be done ahead of future audits, said Cory Angell, a spokesman for Harrisburg receiver William Lynch.

The receiver's office engaged Trout, Ebersole & Groff, or TEG, to assist with the preparatory work necessary for the city's independent auditor, Maher Duessel, to complete the audits, Reddig said. TEG is training two city finance bureau personnel hired at the end of 2012 — an accounting manager and a senior accountant.

"It's been kind of a grueling schedule," Roland said of the compressed paperwork timeline. "We've been doing our best to help them get there."

The Lancaster County accounting firm has had as many as six people working with the city at any given time, she said.

"There are always a lot of adjustments to make to get ready for the end of the year," she said, calling the work routine but on a bigger scale, given the city's previous delays. Municipal accounting services are a large part of the firm's business, she said.

Harrisburg intends to tackle its 2013 audit prep without outside assistance, said Reddig, who has worked closely with Harrisburg, which has been under state-appointed receivership since late 2011.

"Bringing the city's audits up to date is important for a number of reasons," he said.

High on that list has been the impact on the city and related authorities' ability to engage in grant activity and finance projects, including mandatory wastewater system upgrades.

"In addition to it being a statutory requirement, public disclosure of the municipality's financial position on an ongoing basis is an accountability matter," Reddig said. "By providing unbiased, objective assessments of whether public resources are responsibly and effectively managed to achieve intended results, the audit assists with achieving accountability and integrity, improved operations and instills confidence among citizens and stakeholders."

An independent audit determines whether the local government is doing its job and serves to detect and deter corruption, he added: "It further assists policymakers by providing an independent assessment of municipal operations and identifies trends and emerging challenges to assist in making fiscal decisions."

The 2011 audit noted accumulated deficits of $34.5 million in the Harrisburg Authority's water segment and $187.4 million on its incinerator as of Dec. 31, 2011. Those deficits were attributed primarily to the authority not charging enough to cover depreciation expense and not funding amortization of bond discounts, deferred bond issuance costs and deferred losses on refundings, according to the audit.

The city finished 2011 with an operating deficit of more than $11 million, according to the audit. The shortfall at the end of 2012 was about $8.4 million, according to the city's 2012 fiscal report.

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Jason Scott

Jason Scott

Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin County. Have a tip or question for him? Email him at Follow him on Twitter, @JScottJournal. Circle Jason Scott on .

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