The success — or failure — of the long-awaited investigation of the city’s troubled finances is in the hands of the Killeen City Council.
The first step is choosing the right firm to do the job.
How council members vote next week will determine whether the investigation takes the form of a forensic audit or another kind of probe.
The council reached a consensus Nov. 22 to hire McConnell & Jones, a Houston-based firm, to conduct the investigation. A McConnell & Jones representative, whose firm responded to the city’s proposal for a forensic audit, told the council Killeen doesn’t need one, and his proposed alternative would be quicker and cheaper.
Those words are no doubt appealing to council members who slogged through a difficult budget process that required finding $7.2 million to bridge a projected funding shortfall.
But that funding gap — on the heels of three consecutive years of declining fund balances — makes it imperative that the council not take any shortcuts in investigating the city’s finances.
Representatives for all three firms the council interviewed last month acknowledged that forensic audits are generally based on the assumption of fraud. Most council members, as well as Mayor Jose Segarra, stated they don’t believe fraud is involved in the city’s financial troubles.
Still, if the council agrees to proceed with a less-intensive form of investigation, it risks missing key evidence.
Using a colorful handout featuring an inverted pyramid graphic, McConnell & Jones partner Odysseus Lanier told the council the proposed investigation would start at the top and drill down, vet and verify. If any fraud indicators are noticed during the process, he said, the firm would notify the city’s designated contact and identify options to proceed — including authorization to switch to a formal forensic audit. He estimated his “risk-based” investigation could be completed in about five months, depending on the scope. He recommended starting with the 2011 fiscal year.
This all sounds good, and it may well be the best way to tackle the city’s financial problems, but ultimately, the proposal Lanier brought before the council falls short of the full audit described in the Request for Qualifications the city sent out to prospective audit firms.
If the city agrees to the hybrid process offered by McConnell & Jones, council members must commit to full and open communication — both between the auditing firm and the council, and between the council and the city’s residents.
Above all else, the audit process must have integrity. If that’s lacking, any potential savings will have been wasted.
The council must address key issues with the city’s finances — chief among those are the movement of money between enterprise funds and the general fund over the past three years, the granting of no-bid contracts to companies doing work for the city, the movement of municipal records out of City Hall, and the fact that the city has had four finance directors in the span of five years.
Whoever the city hires, council members must closely monitor the firm’s progress to ensure these and other areas of concern aren’t glossed over or ignored.
Killeen residents have made it clear they want to know how the administration has handled their money, and council members must be certain they are authorizing a procedure that will produce a full accounting of the city’s financial dealings.
Many council members were wowed by Lanier’s colorful graphics and polished presentation, but results, not salesmanship, are what matter most here.
The council must take a hard look at what is being offered by the three firms under consideration before making a final decision on such a significant investment of time and money — even if that involves re-examining the process of selecting an auditing firm.
The council only has one chance to get this right — and the public is watching.