DOCUMENTS: Forensic audit committee selects top auditing firm

Photo by KELLY FARRELL, Staff // Buy this photo

Chair of the forensic audit committee Terri DiSciullo calls back an auditing firm to clarify a question asked during Friday's interviews of three potential firms to conduct the forensic audit of the Collier Boulevard reconstruction project. Kelly Farrell/ Staff

Photo by KELLY FARRELL, Staff // Buy this photo

Larry Magel of the forensic audit committee listens closely to answers to his questions posed to three auditing firms vying for the Collier Boulevard reconstruction audit project in interviews by the committee Friday. Kelly Farrell/ Staff

MARCO ISLAND — The “f-word” couldn’t be avoided as members of the forensic audit committee interviewed three auditing firms Friday. Representatives from each of the three firms shared their methods of looking for potential waste, abuse and fraud in the examination of the Collier Boulevard reconstruction project’s finances.

The f-word was fraud and while many members of the committee said they were more likely to uncover waste and potential abuse of authority in the auditing of the six year Collier Boulevard construction project, committee member Bill Sneddon said he hoped “no stone would be left unturned” so the community would have confidence in the audit and the city.

“I hope lifestyle changes will be looked into,” committee member Amadeo Petricca said.

The ad hoc forensic audit committee unanimously chose to recommend the Daytona-based firm James Moore to perform the audit of the project.

Chairman of the audit committee, former City Councilwoman Terri DiSciullo, plans to make the recommendation at the next City Council meeting, March 2.

The firm estimated it would take up to 500 working hours and $79,000 to complete the forensic audit, or detailed audit which will hold up in court.

During the interview process, DiSciullo asked the firms how they would approach several challenges she saw in the audit, including the city’s lack of policies and procedures in the finance department, which she called a “kink.”

James Moore, the lowest bidder, is expected to help the city create policies and procedures after the audit.

Another challenge is that the project involved three major funds, the utility fund, Septic Tank Replacement Program money and capital improvement dollars, DiSciullo said.

She pointed the auditor to documentation already gathered by Dana Souza. He was the interim city manager for six weeks before resigning as the parks and recreation director following his October 2008 public release of a “transition report.” That report was written in May 2008 to then-incoming City Manager Steve Thompson.

Souza observed areas of concern in city finances, including unauthorized spending and unauthorized account transfers.

Since then, Petricca also searched city financial documents and uncovered areas that concerned him.

Petricca said he found about $7.5 million transferred from the STRP to the Collier Boulevard project, which appeared to be excessive overlap of financing for the two large projects.

Each committee member contributed to the interviews taking turns asking the auditing firms questions. The three firms interviewed were James Moore & Co., KPMG Forensic and Crowe Horwath. There estimates for the audit were $79,000, $81,800 and $95,700 plus travel respectively.

Joe Batte asked: “There is a possibility in a forensic audit that you may find improprieties. What would you do?”

“You don’t want to say the sky is falling and it’s not. I would immediately contact a designated member for direction,” said Bernadette Britz-Parker, a CPA with James Moore.

DiSciullo was selected as the designated member. She said she was impressed by Britz-Parker’s quick understanding of the “politically contentious environment.”

“Elected officials can handle good news, they can handle bad news, what they cannot handle are surprises,” said Britz-Parker.

She plans to conduct interviews one-on-one with City Councilors, employees on all levels and former employees.

James Moore will begin by looking at all transactions above $20,000 for the project that spanned 2002 through 2008 and was last estimated to cost $40 million according to a fall 2008 report by former Finance Director Bill Harrison and Public Works Director Rony Joel. Upon the committee’s direction, the firm may look at all expense and income transactions for the not-to-exceed amount of $79,000.

Three members of the public were present at Friday’s meeting, including president of the Marco Island Taxpayers’ Association, Fay Biles, Bob Brown and Bill McMullan. All three said they supported the committee’s decision and praised the committee for their diligence in the selection process.

“I’m impressed with the level of detail you all are showing,” McMullan said to the committee.