WESTBROOK- Westbrook officials are not pursuing legal action against the auditing firm that made mistakes in examining the city’s books prior to fiscal 2010.

“After a careful review of all the facts, the city concluded that there was no legal or factual basis to any claim against (auditing firm Runyon, Kersteen and Ouellette),” Mayor Colleen Hilton and City Administrator Jerre Bryant said in a statement Tuesday.

The statement accompanied a report released this week at the request of the American Journal from forensic auditing firm Graham and Graham. The city hired the firm in 2010 after noting “a lack of clarity” due to inconsistencies in Runyon Kersteen and Ouellette’s 2009 audit report. The city asked Graham and Graham to examine how Runyon, Kersteen and Ouellette handled the city’s books in the years prior to fiscal 2010.

Graham and Graham’s report cited “misleading deficiencies” including inaccurate financial statements, undisclosed errors, and the keeping of city money in unreported accounts.

Hilton, upon taking office in 2010, began making changes to the city’s finance department, removing Finance Director Susan Rossignol and creating a new position, chief financial officer, to oversee all city and school department finances. It was at that discrepancies in the books were notice that didn’t match the Runyon Kersteen and Ouellette audit reports.

Neither Graham and Graham’s report nor the city statement mentioned Rossignol by name, but the forensic auditor did allude to her actions, noting, upon examining emails during the period in question, “The audit manager at (Runyon, Kersteen and Ouellette) clearly admits that his firm allowed the action, statements and work of the then-current finance director to alter the professional duty of the audit firm and to inappropriately allow these actions of the then-current finance director to go unreported.”

The firm went on to note, “It appears very likely … that the independence in thought and appearance of the firm of (Runyon, Kersteen and Ouellette) was adversely impacted by the long-term relationship between (Runyon, Kersteen and Ouellette) and the city finance director.”

Rossignol was not available for comment this week, but in past interviews she has denied any wrongdoing, including putting money into accounts and not reporting it.

“For someone to even comment there were accounts that no one knew existed is a bunch of garbage,” she said in March 2011.

The city has accepted a recent $15,000 donation from Runyon, Kersteen and Ouellette to the Westbrook Community Center.

At the City Council’s Aug. 6 meeting, the council, with Councilor Dorothy Aube absent, voted unanimously to accept the donation. Bryant and Hilton both denied the donation had any connection to the city declining to pursue legal action.

“This has nothing to do with that,” Bryant said.

Representatives from Runyon, Kersteen and Ouellette did not return multiple calls from the American Journal seeking comment.