Be Careful What You Ask For

Back in December of 2009 Burlington’s Progressive Party distributed a flyer entitled “Burlington Telecom: The Facts, Not The Politics” to supposedly set the record straight on Burlington Telecom.  Under the heading “Let’s Not Play Politics With BT’s Future” the flyer suggested that “The City Should Do An Independent Audit Of BT’s Finances, As Mayor Kiss Has Proposed“.  Well, Mayor Kiss got his wish.  An independent audit was conducted by Larkin & Associates, PLLC in Livonia, Michigan.  The conclusion reached by the audit was of no surprise to those who have followed BT for any length of time:

“Larkin is of the opinion that BT exercised only limited oversight of its construction expenditures.  This lack of oversight contributed to BT experiencing improper classification of payments and very limited review of expenditures which may have resulted in an overpayment for services during the construction and purchases of equipment that appear to be in excess of the system needs based on the BT customer base.  Also this lack of sufficient oversight contributed to BT’s purchase of substantial quantities of units in excess of the number of customers.

Concerns were documented by the City’s external auditor regarding the lack of internal controls at the City and BT.  Our investigation also observed a lack of accounting controls and review procedures for cost coding and approval of invoices, which has impacted the operations of BT.  A major area of accounting concern identified is the City’s failure to post payroll and interestcharges for BT to the Pooled Cash account in a timely manner and BT’s failure to post capital acquisitions during the fiscal year.

BT is currently structured as an enterprise business within the City organizational structure.  The lack of timely and accurate accounting information can make it difficult for a competitive business like BT to succeed, and can lead to questionable management decisions.  BT has invested approximately $33 million over a five-year period and this was done, as far as we can tell, without adequate accounting controls or a realistic plan for cost recovery.  This unfortunate situation has left BT unable to service its existing $33.5 million lease financing with CitiCapital and with grim prospects of being able to repay the Pooled Cash fund the $16.9 million that BT has drawn in clear violation of Condition No. 60 of BT’s CPG.”

Apparently, this audit was not to his liking.  According the the Burlington Free Press: “Two days before Thursday’s special City Council meeting devoted to Burlington Telecom issues, Mayor Bob Kiss released a 21-page response criticizing the audit of the municipally run utility prepared last year for the state’s Department of Public Service.”

So, Mayor Kiss calls for a independent audi of BT but does not like the conclusion that the audit points.  I guess this is a matter of being “careful what you ask for”.