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STAMFORD -- The Board of Finance is moving forward with an outside audit of the transfer station despite the recent arrests of two private garbage haulers.

Stamford police charged Wayne Margarum Sr. and Wayne Margarum Jr., of Stamford-based Margarum Refuse, with felony larceny Thursday for allegedly defrauding the city of more than $300,000 in tipping fees. On Friday, Board of Finance Audit Committee Chairman John Louizos said he still plans to move forward quickly with an outside review of the Harbor View Avenue scale house.

The police investigation will serve as a foundation for the audit, which will also look into whether the facility is in compliance with city policies and procedures, Louizos said.

"The police have their methods; they have their standards in terms of collecting evidence and probable cause," Louizos said Friday. "That doesn't necessarily encompass our potential scope. For us to move along with the audit we'll gather the information and then see whether there needs to be a forensic analysis in certain areas."

The Board of Finance has authorized up to $25,000 for an operational and internal controls compliance audit at the scale house. On Wednesday, the board's audit committee met to review a scope prepared by Interim Director of Administration Pete Privitera.

"We are handling it incrementally," Board of Finance Republican Jerry Bosak said Thursday. "It's a starting point, and we're open to moving forward into the forensic option."

Four firms have already responded to the city's request for proposals, Privitera said. On Wednesday, the audit committee decided to shorten the list to two companies: J.H. Cohen and Blum Shapiro.

The other firms, O'Connor Davies Munns & Dobbins and McGladrey Pullen, were passed over because they are the city's current and former auditors.

The firm selected to perform the audit will review all contracts and other documentation related to private haulers, as well as drop-off tonnage records dating back to July 2008.

The auditor will also be asked to identify trucks whose weight varied by more than 2 percent from weigh-in to weigh-in, review cash-handling procedures and reconcile the transfer station's accounts to the Controller's general ledger, according to the RFP.

Board of Finance Independent member Kathleen Murphy sharply criticized the review, which she described as "woefully inadequate."

"I think the scope of the audit was defined in there to be too narrow," Murphy said Friday. "This is just a check the box review. Did they move this paperwork from here to there? There's no investigatory nature."

Murphy said auditors should be tasked with examining the transfer station's records for bulky waste in addition to municipal solid waste.

"You look at what's going in and what's going out," Murphy said. "If you're only going to look at what's partially going in, you're not going to be able to draw any conclusions."

Controller David Yanik said the scope of the audit was designed to target private haulers.

"That's the hotspot right now," he said. "That's where we know we have a problem. So let's confirm that this is limited to a single hauler, or it's not. Then you have to find out systemically what went on that enabled fraud among all haulers, or a single hauler."

A wider scope would have exceeded the audit's $25,000 budget, Privitera said.

Louizos and Bosak blasted Murphy for criticizing the audit after she voted to approve the review at the finance board's last meeting.

"The audit, in terms of cost and scope, initially was voted on unanimously, 6-0," Louizos said. "I think for her to then come in after the fact and then take a different position was unfair."

Police have been investigating the scale house since April, a month after city officials received an anonymous tip and conducted a spot audit at the facility. The review uncovered a 3,000-pound weight discrepancy for a truck owned by Margarum Refuse, and police then began looking into whether Margarum had manipulated the weight of his truck to cheat the city out of tipping fees.

Ten different private haulers using 20 different trucks have dumped garbage at Stamford's scale house from April 2009 through June 2011, according to the audit's request for proposals.

The facility historically weighed trucks once a year to reduce waiting times at the entrance, but Solid Waste and Recycling Supervisor Dan Colleluori said city workers are now weighing every truck as it enters and leaves the scale house.

The scale house review will be the finance board's first outside audit of the fiscal year, which ends June 30. A final report on the audit is due Aug. 15, according to the request for proposals.

The Board of Finance has a $242,000 audit budget this year and $300,000 for next fiscal year. Board Chairman Tim Abbazia, who sits on the audit committee but did not attend Wednesday's meeting, did not return a call for comment Friday.

Kate.King@scni.com; 203-964-2263; http://twitter.com/kcarliniking

BRUSSELS (AP) -- European Union finance ministers are to meet in in Brussels Tuesday to hammer out an agreement over how high banks should build their defenses against future financial shocks, with the U.K. running the risk of being isolated over who should set the height.

The EU's 27 members agree on the need to increase capital reserves of banks, following an international agreement called Basel III, which was negotiated by the world's largest economies to avoid another financial meltdown such as the one brought on by the collapse of U.S. investment bank Lehman Brothers in 2008.

But the U.K. wants national regulators to be able to set requirements significantly higher than those of the EU — a position opposed by almost all other EU members, who fear investors might then prefer UK banks and flee from those in other countries.

On his way into the meeting Tuesday morning, George Osborne, the British chancellor of the exchequer, was non-committal about the possibility of reaching an agreement.

"This is a time of considerable uncertainty in the eurozone economies," he said, referring to the 17 countries — the U.K. not among them — that use the euro currency. "And that uncertainty is undermining the entire European recovery. And I think we're reaching a point where we've got to make a decision to see the eurozone stand behind their currency. A very important part of that, of course, is strengthening the entire European banking system. And that is what we intend to do today."

Once enacted, Basel III would require lenders to increase their highest-quality capital — such as equity and cash reserves — gradually from 2 percent of the risky assets they hold to 7 percent by 2019. An additional 2.5 percent would have to be built up during good times. All members of the G-20 have agreed to implement Basel III; if the European Union succeeds, it would become the first entity to institute the new requirements.

The U.K. is arguing that, because national taxpayers have to bail out banks when they fail, national authorities should be able to set more stringent requirements to guard against such failures. A compromise proposal offered by the Danes, who hold the rotating presidency of the European Union, would allow national authorities some leeway to increase requirements beyond those called for in the Basel III agreement. That proposal has broad support — except, so far, from the U.K.

The finance ministers can approve the compromise proposal without British support, through what is known as qualified majority voting, in which member countries have different numbers of votes according to their populations. However, there is a tradition in the EU that changes that would affect an industry in a particular country — such as the banking sector in the U.K. — are not forced into effect over the objections of that country, and consensus is sought.

"I think there should be a unanimous decision on such an important issue," Swedish Finance Minister Anders Borg said on his way into the meeting.