Last summer, when the Killeen City Council was scrambling to bridge a multimillion-dollar shortfall in the municipal budget, residents demanded a forensic audit to get to the bottom of the city’s financial woes.
Council members agreed to proceed with such an audit, but now it appears they’re backing off of that pledge.
With interim City Manager Dennis Baldwin’s recent announcement that the city had succeeded in identifying $5 million in savings and funding — pointing to a budget surplus for the coming year — several council members are rethinking the need for an audit.
But that would be a serious mistake.
For one thing, last year’s projected shortfall didn’t happen overnight. In large part, it was the product of policies and practices that were put in place over a period of several years. A top-to-bottom audit is needed to identify flaws in these procedures and point out where established policy produced improper financial practices.
Just because the council’s recent accounting maneuvers resulted in a $5 million financial boost for the city, that does not negate the need for a thorough examination of previous budgetary actions — and that means a forensic audit.
Unfortunately, the process seems to have taken a left turn.
Councilman Jim Kilpatrick, who chairs a special ad-hoc committee created to monitor the audit’s progress, says the focus has changed.
The reason, he said, is because “no money has ever been missing.” For a successful forensic audit, he said, criminal action would need to be identified.
First of all, short of a top-to-bottom audit, how can city officials be certain that no money is missing — especially given previous administrations’ propensity for moving money among several funds?
Secondly, criminal action is not a prerequisite for a forensic audit. Such investigations are routinely used to review a municipality’s financial statements to determine if they are accurate and lawful.
So, even if some misappropriation of funds did take place over the 2011-2015 timeframe the Killeen audit would examine, an assumption of wrongdoing is not necessary. A forensic audit would determine if any procedural flaws or accounting missteps — and not criminal actions — led to misappropriation or misreporting of funds.
In some cases — such as the accounting and application of federal grant money — this has the potential to pose a legal problem for the city, and that must be brought to light.
Several factions in the city are pushing for a less intensive “managerial audit,” and some council members, including Kilpatrick, are leaning that direction.
However, the request for qualifications the city sent out last year called for a forensic audit. In hiring Houston-based McConnell & Jones, an accounting firm that presented an alternative proposal, the council took a detour. But it’s not too late to go back to the original audit concept.
It’s also not too late to add residents to the ad-hoc audit committee, where their input would be invaluable. Two residents were added to the city’s standing audit committee last fall — but that panel has no connection to the forensic audit.
Meanwhile, the ad-hoc committee is scheduled to report on its progress at Tuesday’s council meeting. The problem is, there isn’t much to report.
To date, the committee hasn’t seen a detailed description of McConnell & Jones’ proposed scope of work. There is no contract, and the council hasn’t been quoted a price.
In essence, the process is no further along than it was six months ago.
Bottom line, the city’s residents called for a full forensic audit and the council agreed to one.
With a new auditor on board and a new city manager likely to start work this week, the city’s elected officials must commit to conducting the kind of audit residents deserve and expect.
The process, like the audit itself, is all about trust and transparency.
With four City Council seats up for election in May, that’s something its members should keep in mind.