Wednesday, April 4, 2012

Sun Valley pursues contract with forensic audit firm


By REBECCA MEANY
Express Staff Writer

The Sun Valley City Council is pursuing a contract with a forensic accounting firm as the city prepares to delve into accounting practices and financial transactions over the past several years.

John Curran, from the Seattle office of the Newport Beach, Calif.-based firm Hagen, Streiff, Newton & Oshiro made a presentation to the council on Friday, March 23.

The council's decision on Wednesday, March 28, followed a work session to evaluate the need, scope, cost and process of a forensic audit.

Several auditors gave presentations designed to educate city officials about their services as the council discussed whether a previous investigation of internal matters warranted a more extensive one.

"An internal investigation was done by an outside auditor," Mayor Dewayne Briscoe said. "The conclusion of that investigation was that the city should conduct a forensic audit."

At the same time, the Blaine County Prosecuting Attorney's Office, with help from the Idaho Attorney General's Office, is conducting its own investigation. The nature of that investigation has not been publicly stated.

Additionally, Briscoe said, a regular audit two years ago uncovered items that auditors felt should be investigated further.

"One of the concerns of the council is that we bring finality to our community of this controversy that's been going on for far too long," he said. "This isn't a witch hunt. We're not starting out going in any [particular] direction. It's purely fact-finding as to how we are, and to give us guidance in governing this city in the future."

Daniel Rondeau of Sage Forensic Accounting, based in Salt Lake City with an office in Boise, explained the difference between a forensic accountant and traditional auditor.

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"We create our own work plans to do the investigations or analyses that we're asked to do," he said. "A financial statement auditor, as you know, they're typically auditing financial statements that are presented to them. And the purpose of that is to tell the public these statements as presented by management fairly represent what is presented. They match up with the generally accepted accounting practices, the government accounting standards. They're not saying, 'These are absolutely accurate.' They're saying they're fairly presented. That's a big difference."

In response to citizens' concerns that the city—including the council and the treasurer's office—should have been providing oversight, rendering an audit unnecessary, Briscoe asked Rondeau whether he has experience in governmental situations wherein people are doing their jobs but fraud existed but was not uncovered in the normal course of oversight.

"Fraud is, by its very nature, it requires essentially a conniving person that has plans to figure out how to rip you off," Rondeau said. "You can put in the best controls ... the very nature of those controls, they're going to rely on persons and their authorities and authorizations. And if you start to have two persons that are having the similar idea, you can have collusion that allows for this to happen. It doesn't matter how good your controls are."

Neither Briscoe nor any council member has publicly stated that they suspect fraud.

The council also held a phone conference with Tom South and Sue Langley, with CliftonLarsonAllen, an auditing, accounting and consulting firm based in Minneapolis with a Boise office.

The council was unanimous in its support of conducting a forensic audit, authorizing the mayor to obtain references for Hagen, Streiff, Newton & Oshiro, as well as a sample contract. A follow-up meeting with the firm to develop a scope of work has not yet been set.

Rebecca Meany: rmeany@mtexpress.com




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