This week controversy arose surrounding a request by two Sedgwick County Commissioners for more information from the county’s auditor, Allen, Gibbs & Houlik, L.C., a public accounting firm.
The financial issue concerns the way that EMS employee pay is budgeted and its impact on the county’s budget. Commission chair Karl Peterjohn and Commissioner Kelly Parks asked questions of the county’s auditor on this matter, exercising what Peterjohn describes as due diligence. But the issue has grown to become political.
In a Wichita Eagle news story, the county’s chief financial officer said he expected to receive a bill from the auditor for about $900 as a result of what the Eagle characterized as an audit. As this was initiated without a vote by the entire commission, some members are “irked,” according to the news article.
Peterjohn says that the questions he asked are “within the normal scope of the contract between Sedgwick County and AGH” and that there should be no charge for answering these questions. He also notes that the auditing firm works for the commissioners specifically.
There is disagreement as to the scope of the financial irregularity. In an email message, Peterjohn said that “[Commissioner Dave Unruh] does not believe that there is a financial problem here. I strongly disagree. The county will republish its budget because of this problem.”
Following is a letter Peterjohn wrote to the editor of the Wichita Eagle.
I am writing to demand a retraction from the Wichita Eagle’s July 14, 2010 headline, “Parks, Peterjohn order audit without vote.”
We did not order an audit and the article that Ms. Gruver wrote does not state that we did. We did discuss a $300,000 discrepancy that county staff had found in the EMS Department with the county’s outside auditor Mark Dick. Mr. Dick is operating under an existing contract that his accounting firm, Allen Gibbs & Houlik (AGH) has with Sedgwick County. This sizable financial discrepancy extended back to 2007.
The current contract that the county has with AGH goes back to 2008. AGH’s accounting work with the county goes back decades and well before 2007. The current contract requires AGH to perform outside auditing of the county’s books and related financial services. This specifically includes: “…require AGH plan and perform the audit to obtain reasonable, rather than absolute assurance about whether the financial statements are free of material misstatement whether caused by error, fraudulent financial reporting or misappropriation of assets.”
The unexpected and negative financial revelation about this $300,000 discrepancy led me to want to know if AGH would be changing their letter concerning the county’s financial reporting for last year or any previous years going back to 2007. I was also concerned that problems in one county department might extend to other departments as well as revising any of the previous audit letters issued by AGH in the past. This is especially necessary since we are beginning to work on our 2011 budget and my questions to Mr. Dick reflected these concerns on this subject.
This is the appropriate and proper form of due diligence that is needed to be asked by any elected official who has the responsibility for the expenditure of taxpayers’ funds. My inquiry as well as Commissioner Parks may have led AGH to take action under the terms of this contract relating to county finances and record keeping.
I asked questions. So did Commissioner Parks. Commissioners ask questions all the time without having to meet and cast votes. In the 18 months that I have been a commissioner, Mr. Dick and AGH have presented the results of their annual audit to the commission. At that time Mr. Dick has said that the auditors work for the commissioners and are ready to answer any financial and audit related questions we have under this contract.
If there are financial discrepancies in a county department, this needs to be identified and corrected. A lack of proper and appropriate financial controls can impact the county’s bond rating and I believe that by asking my questions, along with Commissioner Parks’, for Mr. Dick were appropriate and were the due diligence that needed to be performed.
Mr. Dick responded to our inquiry since he was not aware of this $300,000 discrepancy until we told him. Mr. Dick looked into this matter under the terms of the AGH-Sedgwick County contract. Mr. Dick then issued a letter to all of the commissioners informing us of what he had found. Commissioner Unruh then expressed his opinion about this inquiry at the commissioner staff meeting last Tuesday.
If county records are flawed, there are provisions to cover this within the contract. These provisions include, “… establishing and maintaining effective internal control over financial reporting and safeguarding assets, and for informing us of all significant deficiencies in the design or operation of such controls of which it has knowledge,” is a county responsibility. In addition the county is also responsible for, “… for adjusting the financial statements to correct material misstatements,” and “… properly recording transactions in the records.”
My intent in asking questions is to make sure that taxpayers’ funds are being spent appropriately and proper records are being kept. Let me add that in many cases in this country public officials, both appointed and elected, have lost their jobs for financial discrepancies a good deal smaller than $300,000 or improper financial variances that are a lot less than 4 years in length. This variance will require the county to re-publish its budget.
I believed that the questions I asked were within the normal scope of the contract between Sedgwick County and AGH. The headline that Commissioner Parks and myself ordered an audit outside the boundaries of this contract without a required vote is odious and false.