Board moves to audit administration
by Andy Phelan
andy@dekalbchamp.com
The Board of Commissioners voted unanimously Dec. 18 to conduct an investigative audit of dozens of purchases and contracts that violated county policy.
The move is based on an audit report by accounting firm KPMG that indicated the county’s Information Systems Department, which is controlled by the CEO and his staff, conducted “numerous purchases that were required to be competitively bid in accordance with the County’s purchasing policy, that were not bid” in 2006.
The report goes on to state that the administration approved contracts in excess of $100,000 for IS consulting contracts “on numerous occasions, ” which are also in violation of county policy. All contracts more than $100,000 must first receive approval by the Board of Commissioners.
An internal audit of the purchases and contracts in question has also been conducted by the Finance Department. It found 14 firms received $22.8 million from 2004 through 2007 on purchase orders and invoices of payments made mostly to information technology consultants that were “split” or artificially lowered in order to circumvent county laws.
“It was obvious that there were intentional violation of those guidelines to circumvent sending items to the BOC for approval or to obtain bids,” said Deputy Director of Finance Eugene O'Mard to the CEO in a memo dated Nov. 14. The memo goes on to say this practice is in violation of the county’s Organizational Act.
In one case, O'Mard's audit, which was signed by Finance Director Michael Bell, found “nine short-term contracts ranging from $42,000 to $49,500” to Scicom Infrastructure Services Inc. from 2005-2007 that totaled more than $420,000. But Scicom was paid more than $2.8 million during the audit period, the letter said.
Scicom President Samit Roy said his company has nothing to hide and welcomes an audit.
“Absolutely, this is not a concern,” he said. “I'll open up my books to anybody.” When asked whether he thought receiving contracts in a manner the finance department deemed “gross violations” was acceptable, Roy said, “I don't think that's inappropriate.”
At an Audit & Contracts Review Committee meeting Dec. 14, Bell told commissioners Executive Assistant Richard Stogner “initiated, approved and signed” the contracts to Scicom and others. Purchasing and Contracts acting Director Kelvin Walton confirmed that Stogner approved the contracts.
The executive director did not attend the Dec. 14 meeting, but he told The Champion he was to blame that he had become “too lax.” “I should have done a better job of oversight,” he said.
The audit is tied to the fact that the administration is asking commissioners to transfer $1.4 million from reserve funds to the IS department for the “substantial overrun” in the department’s budget for consulting services.
The board agreed Dec. 18 to create a separate fund for the $1.4 million and disperse payments only after it has been verified that work to be paid for was received by the county. That process would most likely go through the audit and contracts committee for a recommendation before going back to the entire board for a vote.
KPMG, recently rehired as the county’s external accounting firm, will conduct the forensic audit. The firm is expected to return to the board next month with a recommended on the scope of the work. Members of the board said they hoped to not only determine if the circumvention was deliberate, but how the county can put safeguards in place to prevent it from happening again.
The CEO, who has charged the county attorney, William J. Linkous III, with hiring an outside firm to conduct its own investigation, approved of the board’s move.
“I support what you all are doing,” said the CEO. “The public must have confidence that we conduct ourselves in an open and transparent way.”
Commissioner Burrell Ellis, who along with former commissioner Gale Walldorff pushed the BOC to fulfill its mission as a check and balance to the executive branch, was pleased to be moving forward with the audit.
“It’s very encouraging, especially with a unanimous vote,” said Ellis. “For the first time we are exercising our right to a legitimate audit. Whenever you see several payments just under the threshold bid amount to single vendors on a single day, it raises red flags.”
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