Auditor Denies Overbilling $10 Million
NEW YORK (AP) _ The accounting firm Grant Thornton on Friday denied charges that it overbilled government thrift regulators $10 million for its work on the failed HomeFed Bank in San Diego.
The firm responded two days after the inspector general for the Resolution Trust Corp. released testimony at a special congressional hearing in San Diego that accused Grant Thornton of overcharging the government.
Grant Thornton, a large New York accounting firm, billed the government for clerical and security services during the liquidation of HomeFed, one of the nation’s costliest thrift failures. The inspector general testimony said the subcontract labor actually cost $2 million, but Grant Thornton billed the government a total of $12 million.
The inspector general’s report also partially blamed the overcharging on the RTC, which hired Grant Thornton, because the thrift cleanup agency lacked adequate supervision and cost controls.
Burt K. Fischer, a Grant Thornton managing partner based in Washington, strongly rejected the inspector general’s findings and said the billings were proper under its contract with the RTC.
″We are prepared to provide them documents that clearly support what we’ve billed them on that document,″ Fischer said in a telephone interview.
Fischer accused the inspector general of breaking a written agreement to discuss its findings with the accounting firm before issuing a report. Further, Fischer said the inspector general failed to follow government audit guidelines because it didn’t provide documentation to back up their claims of overcharging.
Fischer contends Grant Thornton’s contract allows it to charge the government more than what it costs to hire temporary workers, thus letting the auditor make a profit.
″They’ve cited no authoritative data to support their contentions,″ he said. ″I believe they are going to be extremely embarrassed when we put this contract document before them.″
Steve Switzer, a deputy inspector general in Washington, said the RTC generally forbids marking-up the cost of subcontracting labor.
″We met with them frequently and they were well aware of what we were doing, although possibly not the conclusions that we reached,″ Switzer said. ″We’re content with our work.″