Louisiana’s insurer of last resort needs new management – and now, the consultant hired to clean up its accounting mess and at least one of its board members agree.
“I’m going to move to make immediate management changes and to bring somebody on to run this thing on a day-to-day basis until we can get permanent management,” said State Treasurer John Kennedy, a board member of Louisiana Citizens Property Insurance Corp.
On April 3, Bob Crawford, of Bostick/Crawford Consulting Group, notified the Insurance Department’s Office of Financial Solvency that four contract accountants whom Louisiana Citizens Property Insurance Corp. had planned to hire to help update its books have backed out of the job.
“The situation at Citizens appears to be degrading geometrically,” Crawford wrote in an e-mail to Denise Brignac, head of the solvency office. “We don’t believe that there is time to wait on the installation of a new management team. Remedial action is needed immediately.”
The accounting problems appear unrelated to Citizens’ well-documented computer system troubles, he wrote. He said many of Citizens’ general ledger accounts have not been posted since the third quarter of 2006, Citizens has not balanced its checking accounts since August.
When auditors tried this week to document the extent of the problem, they learned that Citizens’ acting chief financial officer, Caryl Mathes, had resigned, Crawford said. That left Citizens without a management-level accounting employee or anyone to answer auditors’ questions.
Citizens has not been able to produce accurate financial statements for the past two years and cannot audit its books because of a computer software problem that originated in 2005.
Teams of lawyers, accountants, software specialists and the state legislative auditor have been working in the past month to help fix the problems, but are months from any resolution.
First Assistant Legislative Auditor Daryl Purpera said that outside help and more staff support are needed and Citizens should consider hiring a firm to take over operations temporarily.
“We certainly should be looking at whether or not we need some kind of restructuring firm to come in and help us with this thing,” Purpera said.
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