Nassau must restate the 2012 official audit of the county's finances because it underreported future pension costs, County Comptroller George Maragos said Tuesday.
The Comprehensive Annual Financial Report must be amended before the county can go to the market for short-term cash flow borrowing needed this summer, Maragos said.
This is the first time in recent memory that the county's official financial statement, which is required by state law and conducted by outside auditors in conjunction with the comptroller's staff, has had to be restated.
Officials say technical errors that were made in the reporting of future pension costs do not affect the county's current budget. Some of the mistakes date back to 2005.
Maragos, in a hand-delivered memo to county leaders and the chairman of the county's financial control board, urged that they approve a contract amendment for the comptroller's outside accountant, AVZ & Co., to prepare a restated report.
"Since the county's financial statements may be relied upon by rating agencies and purchasers of county obligations in its upcoming offerings, it is important that we complete the restatement as soon as possible," Maragos wrote. "These findings will have NO impact to the county's results as reported on a budgetary basis."
Nassau expects to borrow $210 million in revenue anticipation notes by June 1, according to the county's multiyear financial plan.
A spokesman for County Executive Edward Mangano declined to comment. Jon Kaiman, chairman of the Nassau Interim Finance Authority, the county's financial control board, also declined to comment until he could review Maragos' memo.
Maragos said the mistakes were discovered as the county's independent auditors, Deloitte & Touche, prepared the 2013 annual report, expected to be completed in June. He explained that the comptroller's office, in taking advantage of a state-offered discount for prepaying pension expenses, erred in setting up "an accounting methodology" in 2005 for reporting those costs. As a result the county underreported about $84 million in future pension expenses since then.
In addition, he said, when the state in 2010 allowed municipalities to defer some pension expenses, the comptroller's staff made a mistake in calculating the costs that should have been reported for 2011 and 2012. Maragos did not disclose how the mistakes were discovered."The County has a legal obligation in compliance with . . . the Securities Exchange Act of 1934 to expeditiously reissue financial statements when material errors or omissions are discovered," Maragos wrote. "It is in the county's best interest to complete this restatement before any debt offerings."