BOE affirms termination of audit firm’s contract

 The Public School System’s former independent auditor, J. Scott Magliari & Co., has protested the termination of its contract with PSS but the Board of Education affirmed Education Commissioner Rita A. Sablan’s decision to do so.

Saipan Tribune learned that the company had protested PSS’ decision in September and that Sablan had denied its appeal. The company then appealed Sablan’s decision to BOE. It was learned that the firm was represented by attorney Richard Pierce.

BOE chair Marylou S. Ada confirmed that J. Scott Magliari has asked for the board to reconsider PSS’ decision in the matter. She said the board decided on Wednesday to affirm Sablan’s earlier ruling that denied its appeal.

“We’re standing by with our decision to stay with Deloitte & Touche for convenience,” Ada said.

She said the board had determined that PSS did not violate any procurement rules or regulations when it terminated the former auditor’s contract or when it selected a new auditing firm.

PSS has already contracted Deloitte and Touche to do the necessary audit report for the system and the board for fiscal year 2011.

It was PSS procurement officer Robert Florian who informed the auditing firm’s president, J. Scott Magliari, about PSS’ decision to terminate its contract in early September. The termination notice indicated that the decision was made for the “convenience” of the school system.

Based on the section 13 of the contract, the chief procurement officer may-when the interests of PSS so require-terminate the contract in whole or in part for the convenience of the PSS. The chief procurement officer shall also give written notice of the termination to the contractor specifying the part of the contract terminated and when the termination becomes effective. The contract also stipulated that the contractor shall also terminate outstanding orders and subcontracts as they relate to the terminated work.

Saipan Tribune learned that J. Scott Magliari & Co. has been PSS’ independent auditing firm since the late 1990s. Its contract with the system is on a three-year basis, basically covering the completion of audit reports for three fiscal years. It was also learned that the auditing firm is being paid about $35,000 a year or $105,000 during a three-year period.

J. Scott Magliari & Co. last signed a new contract with PSS in 2010 for specific audit works for fiscal years 2010, 2011, and 2012.