I Smell Fraud in Addison … In the Fraud Audit

Maybe the Dallas Morning News got it wrong. They must think there’s a hot story here. The story came out March 11 with the headline: “Addison officials, former city manager debate credibility of report on town’s finances.” The same story in print this morning on the front page of the Metro section is headlined “Audit: Millions couldn’t be traced.”

Several things bother me about this story. A forensic auditor was paid $125,000 and did not investigate any fraud. And  did not find any fraud, apparently. I don’t know the billing rate, but it would take 625 hours at $200 to get to $125,000. That’s about 1/3 of a work year for a full-time person. But not just any person. This is a supposedly skilled, experienced, certified professional. How could you spend that many hours and not find any fraud, but whatever was found is purposed to be poor internal controls.

To me, poor internal controls says something might or could happen. Money that can’t be traced is a giant step beyond declaring less than ideal internal controls. One is left to believe something did happen. Did it or didn’t it? You don’t fool around with masquerading facts as suppositions.

If $millions couldn’t be traced, what was the level of effort to trace said $millions? My grandchildren could probably figure out that 95+% of all municipal spending is tied to payroll and benefits payments, debt service payments, construction contracts, professional contracts, insurance, utilities and a handful of other big-ticket items. There are thousands of small items like office supplies and travel that make up the remaining 5% or so. This story, if accurate, simply does not make sense to me.

If this is a professional auditor, then there should be a list of specific findings that have been reviewed by staff in order for them to respond. Did that happen? Are those in the report? Oh wait, not only the money paid for this report, but the enormous weight given to the report by the council and press led me to believe that surely said report would be posted on the  Town’s Web site. It’s not there. Or well hidden. I can find a silly, shallow newsletter by the Mayor that ends with “All is well in Addison.”

It is kind of humorous that the Mayor seems to be wanting to put the toothpaste back into the tube on this audit that he initiated from his comments to the newspaper. Not so fast, Mayor. The audit you commissioned that didn’t seem to find anything concrete has impugned two city managers and about that many finance directors. Not to mention a professional accounting firm that must have completely missed all of those squishy things alluded to by the forensic auditor. As they say in the courtroom, where I am guessing you may be heading eventually, you opened this door. I don’t own any of the Addison bonds, but somebody may be damaged here, too, Mr. Mayor.

I have asked for a copy of this seemingly forensic nebulo-audit in an Open Records Request. I can’t wait to read it. It better be filled with facts and findings that somebody can address. My ORR also includes a request to see the agreement and scope of work between the forensic auditor and the Town. I’m curious just exactly how this scope of work got set and how the need was described by the council. I would also like to know if the Town interviewed other forensic auditors or even had some kind of an RFP/RFQ to determine if the best choice was made.

Surely this was not a sole source or friend of the Council, I wonder? My ORR also includes Campaign Reports to make sure the forensic auditor hasn’t helped out with contributions to the Council.

This smells like a witch hunt. The headline makes for good theater as does the council forum here. But I wonder if the forensic audit should rather have been on the Council itself. I don’t live in Addison, but this stinks. If there was something done wrong intentionally or fraudulently, nail them. However, the entire municipal family is damaged if this is politically motivated as it seems to be. LFM




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