Addressing Real Issues with Real Facts

Dollar bill closeup by Eli Christman

Kanter Criticism Flawed

in City Manager/Finances/Kanter Forensics by

A recent post on the Truth In Addison website criticizes, in part, the Council’s hiring of Kanter Financial Forensics and notes that “Addison has received clean audits for years” and has received awards from the Government Finance Officers Association (GFOA).

Fact: A GFOA audit is indeed an audit

What is not explained (or perhaps not understood) is that the GFOA audit and the Kanter agreement with the Town of Addison involve entirely different procedures for entirely different reasons.

It deals with the auditing of financial statements. Straight from the Government Finance Officers Association website:  “Financial statement audits are designed to provide users of financial statements with assurance of their reliability.”   In layman’s terms, this audit deals specifically with the reliability of the town’s financial statements only.  Have they been audited for conformity with GAAP standards (generally accepted auditing standards) as a part of CAFR (comprehensive annual financial report)?

Fact: Kanter was never hired to perform an “audit”

Here, from the original agreement, dated April 23, 2014, is exactly what Kanter was hired to do:  “The purpose of this engagement is to provide consulting services to Addison regarding its current operational environment and how it may be modified or improved in light of recent profession wide developments in the areas of operations, policies, procedures and internal control environments.”

The agreement further states:  “This engagement does not involve an audit, review, compilation or attest service as that term is defined by the AICAP.”

Unfortunately, in pursuing the scope of work of the agreement, deplorable lack of financial controls were found along with inadequate “current staffing, experience and training levels” which were found to make the Town “vulnerable to experience instances of fraud, waste and/or misapplication of assets.”

In the printed report from Kanter, dated July 11, 2014, it is again stated:  “Our engagement did not involve an audit, review, compilation. Further, our procedures were not designed to detect fraud or non-compliance with laws, contracts or regulations nor were they designed to detect the misapplication of assets.”

Those are the facts.  Yet for some reason, some individuals have chosen to manipulate those facts.  So here’s a valid question:  Why?

As a taxpaying resident (and for the record, this is a personal view), it seems to us that instead of misconstruing facts it would be much more reasonable to be absolutely outraged that simple, basic financial controls have apparently been non-existent for years.  And to have the audacity to want to actively denigrate and fight to unseat three of the Council members, who had the courage to ensure that going forward, our taxpaying dollars and other town income are recorded and tracked properly, is questionable at minimum.

One more fact

It is also of some significance to note that in 1987, Southwest Security & Investigation Company (SSI) conducted an investigation of “Alleged Misconduct by Addison City Officials.”

The 70-page report concludes:  “Public funds were expended with little or no accounting being made for them in the form of receipts, expenses, vouchers, etc.  Mayor Redding apparently authorized expenditures for which his authority to do so was questionable, and the City Manager, Council members and particularly the Financial Director, acquiesced.”

The report further concluded: “A detailed public accounting for all expenditures should be required from each and every official and employee.  The taxpayers certainly have the right to expect their tax dollars will be spent prudently and wisely and that a full prompt accounting will be made of all expenditures. 

Responsibility should be specifically fixed on the City Manager and Finance Director to insure that the policy and procedures are adhered to. “

It appears that for nearly 30 years little changed.

Your comments and criticisms are welcome, but please criticize with verifiable FACTS.

Photo by Eli Christman via Flickr

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