Wednesday, September 12, 2012

Forensic audit cost city $273K

Total includes audit fees, legal fees and final billing estimates

Express Staff Writer

Michelle Griffith

    A forensic audit, voluntarily commissioned by the city of Sun Valley and conducted from April through August of this year, will cost city taxpayers an estimated grand total of $273,000.
    This figure includes money already paid for the audit, estimated final billings for the audit, and related legal fees. The total represents nearly 5 percent of the fiscal year 2012 budget of $5,495,877.
    The audit was commissioned to investigate staff conduct and possible misappropriation of public funds by city personnel during the current fiscal year.
    “We weren’t going to get to the bottom of it any other way,” Councilwoman Michelle Griffith said Tuesday when asked if the city had gotten its money’s worth. “Sometimes you can’t quantify peace of mind,” she said.
    Councilman Nils Ribi said he would like to discuss the cost of the audit, but it would be “inappropriate” to do so before the results of the study were released to the public.
    “Once it’s disclosed, then it’ll be easier for everyone to understand how the cost relates to what we got for it,” Ribi said in an interview on Tuesday. “I know the Sun Valley taxpayers are curious, but because I can’t discuss what I know, what’s in the report, it’s hard to discuss the cost associated with it.”
    As of Aug. 31, Moffat-Thomas, a Boise-based law firm hired by the city to oversee the audit, had billed the city $160,000, according to Interim Executive Assistant to the Mayor Virginia Egger. However, the total cost of the audit includes some additional fees.

    “Total legal fees, including special counsel, associated with personnel actions and lawsuits, which were paid directly by the city of Sun Valley since Nov. 5, total $69,478,” Egger wrote in a Sept. 4 email to the Idaho Mountain Express.
    Furthermore, on Aug. 24, the City Council approved up to $13,000 to cover responses to legal filings by Attorney James Donoval, Egger said. Donoval is the husband of former City Administrator Sharon Hammer, whose contract with the city was terminated in January with no stated cause.
    On Aug. 20, Donoval filed a suit against the city challenging the credibility of the forensic audit. The city retained Boise attorney Kirtlan Naylor to represent the city during this case.
    This brings the total for forensic-audit-related legal fees up to $82,000. That sum does not include money paid in fiscal 2012 by the city’s insurer, Idaho Counties Risk Management Program, for related legal fees.
    “Beginning in mid-November, ICRMP retained the law firm of Naylor & Hales P.C. as special legal counsel for the city for all personnel issues and lawsuit representation, where coverage applies,” Egger wrote in the email. “There is no estimate of what those legal bills would have been should the city not have had this valuable and extensive coverage, which continues today.”

“Sometimes you can’t quantify peace of mind.”
Michelle Griffith


    Lastly, Egger estimates that Moffatt-Thomas will charge the city another $30,000 during the final payment cycle for the audit.
    “I’ve been noticed by Moffat-Thomas that we will be billed, but we haven’t received the bill yet,” Egger said Tuesday. “The reason to get the estimate was to prepare to amend the fiscal year 2012 budget to authorize all necessary appropriations before the end of the fiscal year.”
    The last day of the fiscal year is Sept. 30. During a special meeting on Aug. 21, the City Council voted to amend the fiscal 2012 budget to include appropriations of $273,000 for the forensic audit. The council is expected to adopt the fiscal 2012 amended tentative budget during a regular meeting on Thursday.
  The forensic-audit-related appropriations will be funded by money moved from the unassigned fund balance, Egger said Tuesday.
    “The unassigned fund balance is the city’s savings account,” Egger said.
    Though a portion of the city’s savings will be used, Sun Valley residents might be relieved to know that the city will not have to dip into its last-resort piggy bank—the 16-week reserve fund—to pay for the forensic audit.
    “The 16-week reserve was untouched,” Egger said. “It can only be used in the most difficult of times. The current balance of the reserve is $1,435,000.”
    All in all, the forensic audit might cost the city more or less than $273,000, but at this point it cannot cost less than $243,000. That is the amount that has already been firmly billed to the city.
    “The devil is in the details in terms of how the estimate will compare to the actual final amount billed,” Egger said.

Sun Valley denies records request
    The city of Sun Valley has denied a public records request submitted by the Idaho Mountain Express to the city on Sept. 5. The request asked for the release of a report on a forensic audit commissioned by the city and received by Mayor Dewayne Briscoe and the City Council on Aug. 24.
    Though the city claimed it “supports disclosure” in its written response to the Express’ request—which was hand-delivered to the Express by City Attorney Adam King on Monday—the city refused to release the report or any portions of the report, citing the potential violation of city personnel’s “constitutional rights.”
    “The city of Sun Valley prefers to disclose to the public the forensic audit, but at the same time, must protect the rights of individuals who may be identified in the document,” states the city’s response. “To redact all of the parties mentioned may not be practical because of the ability for persons to be identified by the context. For all of these reasons, and after consulting with legal counsel, the request must be denied at present.”

Brennan Rego:

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