Glendale staffer resigns over arena audit

An assistant Glendale auditor has resigned over her boss' changes to a long-overdue audit of whether the Arizona Coyotes properly paid the city its share of hockey and concert revenue for Gila River Arena.

The arena audit for the 2013-14 fiscal year, announced by the city 11 months ago, has not been released, and city officials have not said when it will be completed.

IceArizona Hockey, the Coyotes' ownership group, is paid $15 million annually to manage the arena.

An internal conflict between City Auditor Candace MacLeod and Assistant City Auditor Andrea McDermott-Fields over the Coyotes audit led McDermott-Fields to resign from her $95,000-per-year job with Glendale in April, according to public records obtained Friday by The Arizona Republic.

"The basis of my resignation is that you have changed my findings in a way that is not acceptable to me or in accordance with the information that I have gathered," McDermott-Fields said in her April 21 resignation letter. Glendale hired her in January.

McDermott-Fields did not identify specific changes that MacLeod made. The former assistant city auditor also expressed concern that MacLeod could have a conflict of interest, in working on the audit, that should be disclosed.

Glendale's audit of the arena-management agreement is pivotal for the Coyotes' future at the arena. The 2013 management agreement with IceArizona allows the Coyotes to move after the 2017-18 season if losses amount to $50 million or more.

The city is scheduled to pay IceArizona $225 million over 15 years to manage the arena if the team remains in Glendale.

Glendale responded to McDermott-Fields' resignation with an inquiry that examined the changes MacLeod made to her findings and whether the city auditor had any conflicts of interest in working on the arena-management audit.

Jim Brown, human-resources director, wrote a seven-page memo to acting City Manager Dick Bowers outlining his findings.

Brown concluded that MacLeod acted properly in making changes to McDermott-Fields' findings.

MacLeod told Brown that some of McDermott-Fields' "documentation was inaccurate, incomplete, unclear, in some cases inflammatory, and at times was based on (McDermott-Fields') opinion, which had not been confirmed with the city attorney or others," according to the memo.

MacLeod also said she regularly reviews her staff's work and makes necessary changes to comply with professional auditing standards, according to the memo. She has been city auditor since 2001. Her annual salary is $134,348.

The memo stated that MacLeod's husband, who was not identified by name, did contract work for the Coyotes related to broadcasting until 2011. He has not worked for the Coyotes' ownership group that signed the arena-management agreement in August 2013, Brown wrote.

Brown concluded in the memo that he found MacLeod did not violate city policy on conflicts of interest.

McDermott-Fields disagreed with the findings in Brown's memo and said Friday the city did not "engage a qualified third party to assess the conflict (over the audit changes) as I had suggested."

The former assistant auditor said MacLeod seemed hostile to her when they met to discuss the audit findings and "accused me of 'throwing her under the bus.' "

McDermott-Fields said she is certified as an accountant, internal auditor and fraud examiner, adding that she has more than 25 years of experience.

Brown's memo did not discuss any of the specific audit changes. Brown and MacLeod did not respond to requests for comment.

Tom Duensing, interim assistant city manager, said MacLeod is ultimately responsible for the final results of the city's audit, which he described as a compliance review of the arena-management deal.

"It is not uncommon for findings to change with the ultimate goal of releasing a report that is fair and accurate," he said.

The arena audit could verify whether IceArizona paid the city what it is owed under the agreement.

Glendale received $5.8 million in arena revenue from hockey and concerts for the 2013-14 fiscal year, but it lost $8.1 million on its investment. That loss is expected to grow to nearly $8.7 million for the current fiscal year, Duensing said.