By Megan Kelley
Editor
mkelley@mihomepaper.com
INDEPENDENCE TWP. — At its regularly scheduled meeting on July 23, the Independence Township Board of Trustees voted 6-1 to table a request from township Supervisor Jose Aliaga to initiate a financial forensic audit. Aliaga cast the lone nay vote.
The request presented was for approval of a financial forensic audit targeting critical operational areas within the township to identify discrepancies, inefficiencies and provide transparency in the following areas of interest: water and sewer billing, payroll, vacation and other paid time off versus HR allowances, overtime, tax distributions to vendors (such as schools, libraries, and the county) compared to taxes received, and any instances of overpayments, underpayments, missing deposits, lost cash and reconciliation issues.
“The reason I’m doing this is because a former employee, at the last meeting, brought up a concern and then a lot of residents at the last meeting were asking questions and when I left the room, people were still asking questions. During the last week, people were asking me what’s going on. Quite frankly, I think that everything is right, we have great people but lately a lot of people have the idea that something is wrong,” Aliaga said.
Because the township auditor was not present at the meeting, Treasurer Paul Brown, who is a CPA (Certified Public Accountant), licensed with the State of Michigan and is a member of the AAICPA (American Institute of Certified Public Accountants) spoke to give some background information on what a forensic audit would mean for the township and about his concerns regarding a full forensic audit at the scope presented.
Brown first iterated the cost attached to a forensic audit, noting that in his experience and after speaking with auditors on his own, forensic auditors generally charge somewhere between $300 and $450 an hour.
Brown then went through each item presented point by point laying out exactly why he felt a forensic audit was not warranted in any of the areas presented to the board.
In only one area of interest did Brown state a forensic audit could be justified for the township and that was with transparency in overtime pay which, according to Brown, the township performed six to eight years ago where no issues were found. He added that as treasurer he has not been made aware of anything that would warrant a forensic audit.
Additionally, in regard to the water and sewer billing, the township voted unanimously at its June 9 meeting to put out a RFP (Request for Proposal) to receive bids for an audit to evaluate REU (Residential Equivalent Unit) rates and water connection concerns.
With such a wide scope presented to the board that lacked specifics, Brown raised concerns about what a forensic audit for all the items listed would cost the township and also added that forensic auditors do not work at a ‘not to exceed’ amount, therefore the township would likely not receive any bids on an RFP anyway.
“Unless there’s some specific information that needs to be addressed, coming out here and saying we’re going to do a forensic audit of all of this is $300,000, That’s an estimate if we did everything that was on here – I’m not in the wrong ball park,” Brown said. “No one is going to give a bid on this job. I’ve already talked to people. When you go into a forensic audit you have no idea how long it will take. They can’t bid $50,000 and dig into something and find out it cost them $100,000 because then they make half the money. They’re only going to do it based on us paying their hourly rate which is going to be $300 to $450 an hour and it takes what it takes. We can’t vote on something that doesn’t have a budget because we don’t have an open checkbook to spend all this money when I have yet to see anything that indicates that there are any significant issues relevant to the finances. Show me something.”
Other trustees including Jim Tedder, Sam Moraco and Ron Ritchie also voiced concerns about the scope of the request.
“This is sloppy at best. I want to say (that) every one of us on the board care about transparency, care about fiscal stewardship, care about fiscal responsibility,” Tedder said. “We’re being asked to open our checkbook on a forensic audit that’s as ambiguous as it can be. If this were my refrigerator, instead of saying, ‘Jim, I think you ate my chocolate chip ice cream,’ you want to look through the whole (thing), spend the time to go through every single item. That’s what you’re representing here. It’s an ambiguous list of just about every aspect of township business and it’s irresponsible that you would ask us to support this…It’s our fiduciary responsibility to be good fiscal stewards of township money and I’m not going to put our township on the hook for some willy-nilly ambiguous proposal.”
When asked for specifics from trustees and township Clerk Cari Neubeck, Aliaga said that the specifics presented were the extent of the specifics he had to provide, stating that he didn’t know what they were looking for but he had heard from people that they were “concerned.”
Neubeck pointed out that the request did not come with a budget or legal review either, adding that there was more information needed before the board could make a decision on the request.
“I think this is something that still has to be discussed. I think we need more information. We don’t have our auditor here. I think we’re trying to answer questions on that person’s level that we’re not equipped to answer and the public has questions,” Neubeck said. “So, I think this is something that we need to have him here (for) and if we can bring this back to the next meeting where we may have more information, we can narrow this down better and then target those questions and find out if that’s something that a forensic audit takes care of. If that’s something that’s internal controls that we need to look at ourselves and better pave this path for us that seems to be very uncertain for us (because) it’s so big. And I don’t think the residents or the taxpayers realize what it could cost. Yes, it appears that there’s a need but we won’t know if the need is valid or not until we do more investigation. I just don’t think we have enough knowledge before us to proceed tonight.”
The board is expected to discuss the topic again at its meeting on Aug. 13.