“A clean, good opinion”!? Which one???

I always get a charge from local press coverage of GAGAS / SIngle Audit presentations because what are seemingly simple concepts are actually mind numbingly arcane.  Luckily for the reader, my mind has previously been numbed with this bit of arcanity so along those lines I got a chuckle at Mary Perez’s rendition of the D’Iberville City Council meeting where their FYE September 30, 2012 SIngle Audit report was presented.

First things first folks as the audit submission is late (it was due on June 30, 2013) and that gives a clue as to the state of the finance department at the City.  Good, clean records are easy to audit and those entities with good, clean records typically are not late with audit submissions. In fact, my experience has been that auditees with good, clean records typically have their audits wrapped up 3 to 4 months after the fiscal year end.  In the private sector 3 months after Fiscal year end is typically considered timely for audit completion by way of comparison.

The second thing is Mary’s report quotes the CPA firm representative as saying the firm’s opinion was unqualified which in turn is a “clean, good opinion”.  My question is which opinion because there are something like 4 or 5 auditor opinion letters contained in a single audit and from the sound of things the City of D’Iberville’s operations are anything but “clean” and “good” as there is double dealing galore there beginning with DMR but not ending there as internal controls over grants and contracts appear nonexistent along with gaping holes in the cash disbursement processes.  That much was clear from Mary’s report and there is nothing good or clean about that.

And then of course there is that pesky FBI investigation into the Utility Authority, SH Anthony Construction Company along with Maxwell Walker Consulting and their curious contract with the City.  And while my experience has been that FBI agents are meticulous in their grooming, there is nothing good and clean about having the FBI about investigating government corruption.

To be clear here I am not casting stones at Mary Perez or the CPA firm, which has a reputation for doing quality work under the GAGAS standards, but I would recommend a bit more effort on the delivery because there is nothing clean or good in the City of D’Iberville these days since the various DMR connected scandals broke other than them numbers on those General Purpose Financial Statements to which the CPA firm referred that are now 9 months old. I submit that was the least important part of the report that was presented yet it lead the story told by the media mainly because it leads off the SIngle Audit Report.

My own two cents and a personal rule of thumb is if the financial data is more than 3 months old, I do not emphasize those sections of the report thus it is the area where I spend the least time in report presentation.  Often discussions of internal controls, compliance with laws and regulations, certain footnote disclosures or, as is often found in the contracting world, the schedule of work in progress are far more salient.  I certainly think that is the case here.

18 thoughts on ““A clean, good opinion”!? Which one???”

  1. A “clean good opinion” is sort of funny when you combine it with two FBI investigations and the DMR/IMMS Walkergate wrapped around the City like a python around a rabbit. At some point all of this will boil over in D’Iberville because in my opinion this is where all roads come together in this massive scandal. This my friends will be ground zero where Bill,Sharon,Scott,Micheal, Moby,Trudy,Rusty,Shaun,Kamran, and John Does A-Z played the game with the peoples money.

  2. I keep seeing the word “grants” associated with Diberville, the DMR and there may have been other instances which I can’t remember. How many suspect grants are out there? Have they all been investigated? Who were all involved with the grant process?

    1. The term grants refers to the federal programs such as CIAP that have been central themes in the unfolding scandal.

      The OIG report also made clear the money that went to IMMS was federal money.

      It is exactly why the FBI is involved.

      1. Am I wrong to think that over the course of the last 5-6 years there is the possibility that numerous other grants and sub grants have existed and have been given out?

          1. Ah-ha, so does anyone know if the truckload has been purged or will be purged? One could statistically assume that there may be issues involved with other grants considering all the commotion so far. At least I think they may be highly questionable myself.

        1. “truckloads”= billions of dollars of federal grant money have been spent post Katrina.

          There are three unusual major events for unprecedented federal largesse: post Katrina recovery funding, American Recovery and Reinvestment Act of 2009 (ARRA) , the BP GOM spill and cleanup.

          A very interesting question is how many different trails the feds are on, and what events triggered the investigation(s?) ?

          1. To be more specific, the billions of dollars applies to the state of Mississippi alone. Just a percent or two gets stuck to someone’s fingers, and we are talking real money. Willie Sutton would be a lobbyist/consultant today if he were reincarnated.

          2. A new comment was posed on SH regarding more firings. The comment on the letter to the editor states:

            “It seems a new round of firings went down yesterday at DMR, and of course they’re not the bad apples leaving but some of the last remaining good ones who would not go along with the new BP shenanigans. One was even threatened with being blacklisted if he did not help with the transfer of power after just being fired. We may come to miss the Walker days after all…..

            The Sun Herald has sure shown it’s party loyalty, not a decent article since Miller took office and the Gov called the BoD. A Fourth Estate, Ha!, more like a 1/4th Estate.”

            I thought it was kind of funny we started talking BP and then this was posted.

  3. Doug, having seen the sausage in the auditing process, is Mississippi any different from what our Legislative DisAuditor does in polishing the turd, taking “samples” of transactions in predetermined categories and from thence projecting an overall rosy sunset? For after all, one could look at minor items and avoid seeing major graft.
    All one needs to do is to put the telescope to the blind eye, see Nelson at Copenhagen.

    1. Same stuff. The main problem is inconsistent audit quality that is inherent to contracting the work to the private sector. Once upon a time I chaired the MS Society of CPA’s Governmental Accounting and Auditing Committee and one of our projects was tech review of municipal reports as the State Auditor in Mississippi was legally charged to act as a repository for the reports with no other regulatory authority. Several of the folks on the committee would spend a couple of days each year reviewing reports and we normally had a few referrals each year to the State Board of Public Accountancy related to substandard work. Phil Bryant eventually made it impossible to continue the project.

      So your comment led to me to pull a sample of municipalities which I am somewhat familiar to see if the uneven quality of work product was still an issue and sho nuff it is. To wit:

      The first three are from the same firm that audited D’Iberville and these reports indicate to me the firm did good work – you can’t know for sure without seeing the workpapers my experience has been the quality of the report itself is an excellent indicator of what is under the hood:

      Diamondhead MS: http://www.osa.ms.gov/documents/municipalities/2012/diamondhead12.pdf

      Waveland MS: http://www.osa.ms.gov/documents/municipalities/2011/waveland11.pdf

      Bay St Louis MS: http://www.osa.ms.gov/documents/municipalities/2011/baystlouis11.pdf

      D’Iberville’s 2012 is not yet online and it appears both BSL and Waveland are late submitting their 2012 reports.

      Picayune’s auditors appear to have done a good job as well: http://www.osa.ms.gov/documents/municipalities/2012/picayune12.pdf

      But in the land of Dizzy Dean there are MAJOR problems:

      First thing that stuck out to me is that 80% of the footnotes to the financial statements are not in the report and it is not a question of missing pages as the page numbers are consecutive with no gaps.

      I have not done governmental A&A in over a decade but I will note there is another CPA firm in town that has a reputation for doing quality work but instead the Mayor and City Council hire a firm from the Jackson metro area. I think I understand why after reading the report, especially in light of the overtime problems in the Wiggins Police Department that made the local paper on at least 2 occasions that I know of and I do not read the local paper in Wiggins as I favor the beauty shop network to get my Stone County news. Those massive internal control issues are no where to be found in the report I linked above, MIA along with them footnotes.

      It represents an example of the type of report we used to refer to the State Board.

      Mayor Alexander was also beat in the primary election recently so maybe the City will go back to buying local and get a better quality product in the process under new Mayor Miles.

      That is likely more an answer than you wanted Empire but…..:-)

  4. Doug, your CPA expertise displayed above is the second reason why local politicos have endorsed and possibly aided and abetted the endless faux legal assaults upon your persona and Slabbed.

    The first reason naturally is your tenacity and investigative skills at peeling the proverbial onion back to the point of producing hysteria and fear in the hearts of those who survive solely at the public trough.

    Wonder if the Honorable District Judge Sue Morgan knows that dat’ roaming SUPER 8, venue hunting Counsel-At-Large, Abel, has again filed his last faux legal suit against you, which he recently withdrew before her in U.S. District Court upon you filing for sanctions against him, in the CDC of New Orleans; and if that knowledge would have any effect on her anticipated adjudication of sanctions pending against him in the Eastern District.

  5. http://www.sunherald.com/2013/07/12/4793850/dmr-looking-for-a-firm-to-help.html

    The DMR, in an ad this week, seeks “proposals for management, administration and closeout assistance” for the CIAP program.Elizabeth Barber of Barber and Mann — a firm in Ridgeland that specializes in land appraisals, land planning, conservation planning and real estate development — had been managing the program. Her contract with the DMR expired at the end of June.

    DMR Executive Director Jamie Miller said the description in the ad is similar to the work Barber did.


    1. Ya. Hmmm is exactly what I am thinking to.

      In a previous post above you stated BP GOM. Is this related or was it meant to say GOMA.

  6. BP GOM =BP GOM Oil Spill, which was not really federal dollars to start with. It is a special case where due to the oil spill private dollars become federal dollars.

    Of course GOMA = Gulf of Mexico Alliance, the five state alliance of FL, LA,MS,LA,and TX. GOMA is the entity which IIRC is to direct the spending (within the five states) of 80% of the federal environmental fines levied for the Deepwater Horizon oil disaster.

    Then there is the $500 million over ten years “research partnership” of BP and the Gulf of Mexico Alliance known as Gulf of Mexico Research Initiative. Knowing how researchers sometimes feel they owe fealty to those who pay the bills; this ought to be of some concern too.

  7. To the contrary, Doug, the more info, the better.
    Now, does your state leg auditor do like the klown we had before (I recall he ran for Baton Rouge mayor), handing out plum auditing jobs to his circle of friends?

    1. Mississippi elects what is known as the State Auditor. Since the 1980s it has morphed into an investigative adjunct to the AG and local DAs as very little actual auditing is done by the office. The work is contracted out to CPA firms, largely by the auditee from the state approved list of service providers. Getting on the list is not that hard.

      At the local level political favoritism certainly exists to a degree but nothing like you seen historically from the Louisiana Legislative Auditor’s office. The dynamic in Mississippi for most local governments is the price of getting the service and price alone. Firms that low ball these audits typically do not do all the work associated with the service so the effect is the same as if the fix were in from a practical standpoint.

      The bottom line is a well designed audit will find most of the ugly bumps. That said the type of embezzlement Dixygirl just described would be a challenge but it too could be uncovered.

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