By Sally Absher
Last week, Audit Committee member Commissioner Mike Brown, who has been one of the most vocal critics of the wasteful spending and misuse of our tax dollars by the McIntyre administration, ignored the unanimous request of the school board to conduct an external forensic audit of the school system credit cards going back 5 years.
At the beginning of the special called Audit meeting, Brown noted that “The commission can set the scope of the audit.” But when Brown made the motion for an audit of the school credit cards, he ceded that authority.
He motioned that the Knox County Audit Committee, “recommend to Knox County Commission that the action of the internal auditor in commencing a performance audit of the Knox County School’s credit card program be ratified, and in proceeding with the audit, the extent and scope shall be developed by the internal auditor.”
He further moved that, “Should the internal auditor deem it necessary to conduct an audit of the Knox County Schools purchasing program and its travel expenditures, that she be so authorized. And he set the initial term of the audit to review the previous two years, not five as the school board requested.
Brown dismissed the board’s request for an external forensic audit as “shutting the barn door after the horse got out.” The relationship between the Commission and the school board has been contentious for years, but this was a case where the board was trying to bring sunshine to what was an embarrassing situation for the school system. Sunshine comes from outside, not within.
An internal “performance audit” looks at how the accounting process works and whether officials followed the rules. It is not designed to identify any areas that are criminal in nature, or acts of fraud, waste or abuse.
Since both the school nutrition program and credit card program are also undergoing criminal investigation by the Sheriff’s department and state officials, perhaps there is more than just “officials not following rules” at play.
By following the lead of Commission Chair Brad Anders in requesting an internal performance audit using “Miss Andrea” Addis, Brown and the Audit Committee thumbed their noses at the wishes of the school board and tax payers of Knox County.
This is the same auditor who took 5 months to conduct an audit of the Schools’ Physical Plant Upgrade (PPU) fund account, after estimating the audit would take 4-6 weeks, and who changed the scope of that audit.
Addis was instructed by County Commission to audit the land purchase for Northshore Elementary and “go back as far as needed.” The PPU Audit was requested to determine if there was a slush fund operating in Knox County Schools and if there were improper capital expenditures that could affect the accuracy of capital accounting.
She did not follow the instructions of the Commission nor did she inform Commission that she changed the scope of work from what she was charged to do. She decided unilaterally to limit the scope of the audit, reporting, “The scope of the audit was PPU account transactions for (FY) 2012 through FY 2014.” The land purchase was covered in a single paragraph:
“We also noted $1,656,250 in land purchase costs for the new school recorded in FY 2011 which fell outside the scope of this review. Schools personnel indicated the land was purchased out of the PPU account since it was purchased prior to approval of appropriations for the new construction project and the creation of the separate account to track costs. Once the appropriations were approved, a separate non-PPU account was created to track the project costs.”
Commissioner Jeff Ownby, who requested the audit, said the problem with $1.6M being spent from the PPU account to purchase the land is that commission had already approved $800,000 for the land purchase, meaning more than double the amount allocated was actually used to purchase the land.
Yet Dr. McIntyre had assured County Commission that Northshore Elementary was both on time and on budget. Was this an oversight, or was he willingly and knowingly misrepresenting financial information to the funding body?
Addis’ audit states, “The issues identified in this review are not considered criminal in nature and no acts of fraud, waste, abuse, or noncompliance with laws or regulations came to our attention during testing.”
The PPU audit did not go far enough to determine if misappropriation of funds had accrued. So her statement above is incomplete.
Much was said at last week’s special called Audit Committee meeting about giving the internal auditor the “flexibility to define the scope of the audit.”
But is the internal auditor becoming a de-facto inspector general? It wasn’t long ago that charter amendment proponents were pushing for an inspector general, who would be hired by the mayor. Charter amendment opponents asked how could the inspector general audit the person who hired them? This would have compromised any attempt to ever audit anything in county government.
If the County Commission cedes the power to define the extent and scope of an audit, then who provides oversight? If Addis redefined the scope to ignore the number one finding in the PPU audit, what confidence do we have that the internal auditor will not do the same with the credit card program audit?
