Forensic Auditor Responds to Citizen’s Comments

Editor’s Note: The Following Letter to the Editor includes quotes from a Letter to the Editor published in the June 10 edition of the Marlin Democrat. Read the full letter here

“I write this article as a concerned citizen.” 

No, you write this article as a disgruntled ex-mayor, bitter at having lost a re-election bid to an African-American woman.  Further, much of what he said is true – the systems are in terrible shape.  What he fails to mention is that most of these were inherited from him and was one of the main reasons he was defeated in his re-election bid. City personnel are now working diligently to repair years of mismanagement and neglect. 

“Third, the other item she promised was she would find the missing money.”

The financial statements and records of the City were often in such horrendous condition, the result of years of mismanagement, that it often became difficult to find any type of evidence.

“The Mayor and City Manager then make the decision to only audit one year. What is one year going to accomplish?”

This is a falsehood.   We researched numerous years, depending on the topic.  

“Well, after almost five months they finally presented the forensic audit to the council stating that the records were bad and that they could not determine if there was money missing.”

Another falsehood.  We said that in what we researched there was no money missing, but the records were so bad, and apparently so for such a long period of time, that it was impossible to state with certainty that this was true.  For instance, during the audit we found evidence of bank accounts for which there was no record, either physically or in the financial system.  The cost of the audit was greatly inflated by the need to go back and re-create financial records for numerous years that should have been there in the first place.  

“First, they did not turn in the 10-year grant tracking report that shows all grants and loans since 2008 till end of 2018. It shows all open and closed grants, what we bought with them, how much and what was current status. There was also an excel worksheet that showed all current and open loans, what their annual payments were, and payment schedule since some of our loans increase every few years.”

Until this letter was written, there was no knowledge of any tracking reports at all.  That is because the former administration established no policies and procedures as to how matters were to be handled.  One of the main responsibilities of an administrator is to create or maintain a system so that when one or more employees or administrations leave, their successors know how to proceed.  No such succession was planned by him.  There was also no record on any of the computers researched of any such tracking report.  Of all the incompetence of the former administration, this is perhaps the most stunning, because it involves such large sums of money and reporting requirements both by the federal government and the state.  

“Ninth, the Mayor then rushes to tell the citizens that the report shows that there is $2 million unexplained in an account that the city was unaware of. First, the city was aware of all the accounts, but because of your poor prior decisions you where (sic) not aware of the city’s finances.” 

The city was categorically unaware of all the accounts, because they were not in the city ledgers.  

“I had to go to a council meeting to inform them of bank accounts with money in them that the city had.”

Think of the stunning admission of this.  He had to go to a city council meeting because there were no records of any such accounts in any of the city ledgers.  Let that sink in for a moment.  

“Well, since neither the City Manager or Mayor was willing to do any research, as a concerned citizen I called the bank to find out that the $2 million was the bank’s money that they had pledged on behalf of the city to securitize the city's money.”

Please remember that the forensic auditors were denied any records for what those funds were and for what purpose they were used.  I believe that the current city administration asked the same questions and were denied answers.  So how does a former mayor go to the bank and obtain the information that had been denied on at least two other occasions?  

“Why was the report accepted by the council before all bank accounts and reports where (sic) turned into the auditor blows my mind.”

The report was produced because access to the information was denied to us by the banks.  Strange how the former mayor was able to obtain much of it.  Furthermore, the bank accounts and the reporting thereon were in such wretched condition, again caused by years of neglect and mismanagement, that it would have taken many months and hundreds of thousands of dollars to examine everything.  

William "Bill" Stewart, Jr.

CPA/ABV/CFF, CFE and Founder of Stuart and Hurst, LLC

Forensic auditor for City of Marlin