Just say NO to Forensic Audit - An opinion

Submitted by Dave Lott

October 4, 2016 8:09 a.m.

Although no longer a resident of Fernandina Beach, I am a professional in the risk management field with more than thirty years’ experience in the payments and banking industry. I urge the City Commission NOT to spend any more taxpayer monies on a forensic audit of the Parks & Recreation Department. My reasons for that position are as follows:

The Dufresne report clearly identified a number of financial control inadequacies in a number of the P&R activities, but provided overall guidelines as to how best remedy those deficiencies. Commissioner Smith calls for something to be done and from what I tell from various sources, City Manager Martin and Finance Director Clifford have begun those efforts and are taking decisive and corrective action. I am certain that with their combined experience and knowledge, they can develop and document effective control and reconcilement procedures. I suspect that such policies and procedures are already well documented in the Finance and Utility Billing departments and can easily be transported over to the Parks & Recreation Department with a little tweaking as necessary.

In the Commission meeting of September 6, the City Manager reported that the City had not received any claims from any parties about funds paid for participation in the cancelled June BBQ event that had not been returned. Given the amount of time that has passed, I concur with Mr. Martin’s assumption that it is highly unlikely that there are any funds missing or misdirected. The lack of any evidence as to the deliberate malfeasance of any employee in the handling of the money emphasizes that the most direct need is tight financial controls, not an exhaustive examination of what has happened in the past.

I certainly understand that the City needs to operate in such a manner to have a clear reputation of integrity. Some of the events that have been reported involving poor (or non-existent) financial controls have certainly created an atmosphere in harming that reputation; but I also believe that public statements from some of the commissioners have expanded the potential for such damage by questioning whether such inadequacies are prevalent in other departments when there is no evidence, anecdotal or otherwise, to suggest such a situation. Unless there is a clear basis for the suspicion of malfeasance, such public speculation should not be made.

I think that the commissioners need to separate the individuals and personalities from the risk management issues going forward. Policies and procedures should be developed independent of individuals and designed to provide the proper balance between risk and control. Any employee that does not adhere to such policies and procedures would be subject to disciplinary action. Of course, should it be discovered that there has been the improper handling of monies to the unjust enrichment of an employee or group of employees, those employees would be subject to criminal action as well.

While I do not support such action as I think it is totally unnecessary and would be extremely harmful to employee morale throughout the City, if there is truly a suspicion of criminal activity, is it not possible for Police Chief Hurley to request that the FDLE investigate using their financial forensic examiners? There may be a precedent in the City for this as I thought the FDLE was brought in (when Bill Leeper was Mayor in the mid-90s) to investigate whether there were some financial irregularities going on with the City’s golf pro misreporting revenues.

Again, to Commissioner Smith's comments at the September 6 meeting, I don't believe that the City is simply putting the findings of the Dufresne report on the shelf and doing nothing. The City is moving forward with the development and implementation of the recommended policies and procedures cited by the report and that should be sufficient lacking any evidence of any intentional mishandling of funds due to the City or other parties.

Given his professional experience in this matter, I urge you to follow City Manager Martin's recommendation to not move forward with a forensic audit and let him continue his efforts with the Finance Department staff to implement the necessary level of financial control policies and procedures in the Parks & Recreation Department activity areas as well as ensure that such rigor is being followed in any other City departments involved in the handling of fees or revenues.

Editor’s Note: Dave Lott has been a management consultant specializing in consumer banking and payment systems for 30+ years. As a former 11 year resident of the City, Dave has served on numerous City advisory committees. Dave served as Interim City Manager. He currently resides in Atlanta, Georgia.