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Justify audit expense

December 6, 2008
Cape Coral Daily Breeze

Cape Coral City Council spent its workshop session Monday drafting the work parameters for a new audit of the Utility Expansion Project.

Details to be included in the request for proposals, or RFP, are still being debated. Council determined unanimously back in August, though, that the audit conducted this go-around would be a "full forensic audit" encompassing the SW1-SW4 phases of the UEP, those portions of the expansion that took place from 2003-2006.

With nearly $1 billion at stake from start to completion - assuming the UEP makes it to completion - we understand why council wants to make sure that any non-compliance issues are identified.

We have no issue with audits and, in fact, applaud the city's implementation of internal auditing controls for the UEP, a previously identified weakness.

We don't understand, though, the reasoning behind the call for a forensic audit that is to include aspects of the UEP audited by both private firms hired by the city and the state Audit General's Office without council confirmation that the previous audits were a waste of money or there is a strong suspicion of wrong-doing that needs another look.

Consider:

Council spent $49,700 for an audit of the Pine Island Corridor portion of the UEP in 1999. Council then spent $130,000 for an audit of SW1 and SW 3 in 2006. That audit also included some review of the 1999 report provided by R.L.Townsend and Associates.

What is important is that each compliance audit was contracted to verify that discrepancies did not exist between contract billings and actual payments for things such as labor, rental charges and material purchases; that all bonds and insurance had been obtained and for the proper amounts; that all change orders were priced in accordance with contract documents; that the contractor provided quality materials and services as required by the scope of work contract; that effective quality control procedures were in place; and that subcontractor billings and payments were accurate and paid in accordance with the contract.

In other words, the auditors were hired to determine whether the UEP construction manager-at-risk was performing according to the contract and professional and legal standards, and whether city staff was providing proper oversight.

Each audit, as audits do, found areas for improvement on the professional practices side. The audit conducted by Kessler International also highlighted what the auditor said were sloppy internal controls along with questionable bid procedures that were referred for possible criminal investigation.

This was a serious allegation - nearly three years ago.

But the city contested many of the findings, implemented the changes it saw fit and, to date, no criminal improprieties have been documented - standard, standard and thank goodness.

So we ask, what is council's justification for a forensic audit, a "deeper" audit, if you will, of areas previously probed, with findings submitted to the city and accepted or not, as is common practice? Especially in light of the fact the possible improprieties outlined by Kessler and submitted to the Department of Justice have yet to result in either grand jury subpenas or handcuffs?

For purposes of transparency, we would like council to answer this bedrock question: What specific justification does the city have for a repetitive audit?

And we would hope the answer is much more clear than the "reestablishment of public trust" concerning the UEP because that is not going to happen.

One, no project will get a "perfect" audit, a report with no areas for improvement flagged. Nor is the city likely to accept every item recommended for change, a key area of public criticism.

The audit process just does not work that way. There is always some discussion, some debate and some remaining difference of opinion.

Two, the UEP is so highly politicized that unhappiness with any report received is, unfortunately, a given. Just look at the last two city-funded audits as well as the two conducted by the state.

This controversy should not be the impetus to council's quest for a new bigger, better audit to include an overlapping of areas previously scrutinized.

Give the taxpayers some hard justification for the expense.

If there is solid cause to believe new information will be forthcoming concerning council's target goal of "identifying cost exceptions and noncompliance with... contracts and applicable laws," proceed with the RFP. It will be money well spent.

If factual justification is not there, or if specific suspicions of criminal irregularities cannot be defined, save the cash. It's simply good business.

- Breeze Newspapers

 
 

 

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