Whatever the results may be of an investigation of Killeen city finances, the findings will “absolutely” be made available to the public, City Manager Ron Olson said Friday.
Olson raised concern June 6 when he told the auditors he expected the city to review the documents first. Although Olson did not work at the city during the years under investigation, several current city management employees did, and they handled finances during those years.
Houston-based public accounting firm McConnell & Jones was hired to examine whether fraud played a role in the city’s downward financial spiral, which included several years of city administrators spending more money than the city had taken in.
The firm raised additional concerns June 6 when auditors were expected to provide a mid-audit briefing, but provided little information about the audit while council members asked few questions. The public later learned Olson asked council members to be cautious in their questions to the auditor.
Olson, in an interview with the Herald on Friday, addressed concerns of manipulation in the audit process.
“Nobody here has attempted to influence (the firm) one way or another. We give them the information they ask for, that’s it,” Olson said.
After the report is handed to the city, the administration will agree or disagree with the findings, “but their findings are going to be their findings,” he said.
City Auditor Matthew Grady, who like Olson was hired this year, is the liaison for the city with the firm. On Friday, Grady said the firm remains on track. Aside from noted challenges finding older documentation to support expenditures, “they’re getting the information they need.”
Councilman Steve Harris, who is on the audit subcommittee headed by Mayor Pro Tem Jim Kilpatrick, is looking forward to the subcommittee’s next meeting on Tuesday. It has not met since February.
The committee will discuss how the firm will present its draft report.
When Harris was asked whether he was satisfied with the firm’s two progress updates so far, he said: “Nowhere near close. We’re still missing a mid-audit report.”
Auditors gave a progress update to the council May 2, at the request of former Councilman Richard “Dick” Young, and again June 6.
Although Olson is not in the position to oversee the audit’s progress, he said responsibility rests on the council’s audit subcommittee to let the firm know whether it is satisfied.
“Giving a report to the audit committee seems to me to be a big deal,” he said.
The city manager acknowledged the uniqueness of the audit, which he called unusual, and acknowledged the process has not been clear.
When McConnell & Jones came to the council for the first update, it could have done so differently, he said.
“That turned out to be, in my view, a misinterpreted, unprofessional report,” Olson said. “(The auditor) responded, basically, ‘we don’t know for sure, but we think.’”
There was no context to the firm’s observations, Olson said.
“Why would you say that? Why would you speculate about what the outcome is going to be? Get the outcome; get the facts; get the truth,” Olson said. “That makes no sense to me.”
Unlike Olson, many observers were relieved auditors announced initial observations May 2 by indicating, among several things, that bond funds were used for unauthorized purposes, and that enterprise (moneymaking) funds were transferred to another fund to buy vehicles not used for the benefit of the respective enterprise fund.
Before getting information May 2, the public lacked confidence in the firm. McConnell & Jones responded to a forensic audit bid by saying it would not do one, and instead sold the council on a management audit.
The council chose the firm over two competitors with extensive forensic auditing experience.
After McConnell & Jones provided little information June 6, questions remain about whether auditors will seek relevant documents, interview key witnesses and provide important information to the public. The audit’s completion is expected at the end of July.
When Olson cautioned the council in a memo to limit its questions of the firm, he intended to curb questions that would have caused the firm to speculate, he said.
“I stand by that,” Olson said. “We shouldn’t be encouraging them to speculate. We should be encouraging them to do a thorough, professional job of auditing and tell us the facts.”
Olson said it was important to him for auditors to identify anything wrong so he can fix it.
“As far as trying to manipulate the outcome of this thing ... if that’s even an impression on your mind or anybody else’s, that is absolutely not the case.”
WHY ARE WE HERE?
Public perception and trust tanked when city administrators failed to share news of declining city finances, kept it quiet for years and then finally pulled the curtain back on a heavy $8 million budget shortfall last summer.
Overspending from at least fiscal years 2013-2016 was visible in lopsided budgets, and although the city came close to balancing the fiscal year 2016-2017 budget and began work on 2018, it left in its wake a trail of questionable financial decisions with little or no explanation.
The council hired McConnell & Jones for $394,456 to examine seven areas of interest, approved in a 5-2 vote March 14. Those include: capital projects; bond money usage; interfund transfers; pay increases; city/developer agreements; roadway ownership; and post-recall spending.
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