Mystery Solved & Miscellany: Bay St Louis still has not submitted its 2014 Audit to the Office of State Auditor

As we unraveled this mystery the scene that pops into my mind is Homer Simpson doing his famous DOH after doing something boneheaded.

First up is why is the 2015 audit not online at OSA? The answer is the 2015 audit is in review and that it will not show up until the City gives OSA technical Assistance a copy of its 2014 audit. Further a letter was mailed on February 11, 2016 from the OSA’s Greg Higginbotham which stated:

As of February 5, 2016, this office has not received the Municipality’s Annual Financial Report for the Fiscal Year End 2014. Mississippi Code Section 21-35-31 requires this report to be filed with the State Auditor by September 30 of each year for the preceding calendar year. This statute also provides penalties for Municipalities who fail to file their reports. We ask that you file your report immediately.

We understand that there may be special circumstances causing your filing to be delayed. If this is the case, it is important that you make us aware of these circumstances. Please contact me at 800-321-1275 if the Municipality’s Annual Financial Report will not be forthcoming in the next few days.

If I may be so bold to give Municipal Clerk Gonzales some free advice since the above letter was addressed to the “Municipal Clerk” it would be Continue reading “Mystery Solved & Miscellany: Bay St Louis still has not submitted its 2014 Audit to the Office of State Auditor”

Lunch with the auditor a bad thing?

audit
1. A formal examination, correction, and official endorsing of financial accounts; especially, those of a business, undertaken annually by an accountant.
2. A systematic check or assessment; especially, of the efficiency or effectiveness of an organization or a process, typically carried out by an independent assessor.
3. In computer programming: a process used to detect accidental input or processing errors as well as fraud, often using test data and special-purpose software.
4. Another aspect of computer programming in which a set of procedures are established to ensure the quality and integrity of a data base and to carry out such a process or procedure.
5. Etymology: from Latin auditus, “a hearing”; past participle of audire, “to hear”.

It now stands for the official examination of business accounts, which were originally oral or spoken. The verb is from about 1557.

OK folks, now that I let y’all in on one of the secret questions you must successfully answer to learn the secret handshake of becoming an auditor, namely that to verb “audit” and the term “auditor” are derived from the Latin word for “listening” and “hearing” let’s examine an alternative world, where auditors must work in silence and are not allowed to ask questions:

Fillingame disagreed with Atkinson’s report in a telephone interview shortly after Thursday’s meeting.

“I read the report and was shocked at the amount of inaccuracies and the amount of very flawed details within the report,” Fillingame said. “It was obvious that a lot of the facts that were supposedly presented were taken from conversations and not drawn from the documents. Really, some of the more serious (accusations), and I’m very concerned about that.”
Fillingame said any information the council required has always been available at city hall, and any problems were due to a lack of manpower to duplicate and deliver the information.

I can understand Hizzoner’s confusion because he was not in attendance when Sam Atkinson, Director of the Office of the State Auditor’s Performance Audit Division, presented her office’s report on the causes of the many well documented problems contained in the FYE 9-30-2014 municipal audit report performed by the firm Wright, Ward, Hatten and Guel.  In its simplest terms the performance audit is a report on an audit report.

To the extent the Performance Audit Division owes its origins to what I’ll term an auditing fad dating from the 1990s it would follow it is not the same type of engagement as an audit in accordance with GAAS and GAGAS.  This explains why Ms. Atkinson is well qualified to run the Performance Audit Division because she is a Mississippi Governmental Finance expert rather than a CPA although her division has several on staff.  Hizzoner and the City’s finance department employees could certainly have benefited from training Atkinson gives at events like MML and that is really what the performance audit process is about, improving performance by pinpointing the root causes of the problems so corrective action can be taken. Continue reading “Lunch with the auditor a bad thing?”

Harbor Fest-Gate: Never a dull moment in the Bay

I understand Hizzoner and the City Comptroller were MIA at last night’s Bay City Council meeting, perhaps because the Office of the State Auditor has summoned the City Council to a meeting tomorrow, where the rumor mill holds the boom will be lowered on the Mayor and his history, habit and practice of ignoring the home rule statute. We’ll see.

Meantime Harbor Fest promoter Michael Rosato announced last month the dates of the 2016 Bay Harbor Fest, an annual festival that has been heavily promoted in the local media but which has massive problems the least of which was last year’s Greg Allman set, which was delayed several hours.  The bigger problems to holding this year’s event appear to be twofold:

  1. Rosato still owes the City money for last year’s event.
  2. Rosato evidently owes the festival’s vendors money from last year as those following along last night on Twitter witnessed:

Now given how Hizzoner handles the City’s finances, I can understand the attraction to the event’s promoter but the City doesn’t do itself any favors holding a money losing music festival. Stay tuned.

Major announcement expected at tonight’s Bay City Council meeting

There is a lot of background chatter on this topic folks but I will not report the rumor because, if true, will be bad enough for certain parties without advance speculation on my part. I’ll do my best to attend this evening and broadcast the meeting on Periscope. Stay tuned.

Come join Hizzoner on the magic carpet…..

Car Wreck Les
Citizens parody of Bay St Louis Mayor Les Fillingame’s attempts to spin the now seriously late FY 2014 Municipal Audit and ongoing Department of Justice and State Auditor Investigations into the City’s financial practices.

Sources: Auditor’s report shows BSL finances ‘pretty ugly’ ~ WLOX.com

Tonight, Bay St. Louis finances are under the microscope. WLOX News has confirmed that both the Department of Justice and the State Auditor’s office have sent investigators to Hancock County. And according to multiple city council sources, what they’re finding “is pretty ugly.”

The council members we talked with today say investigators are asking a lot of questions about how money has been spent by Bay St. Louis leaders. Those sources tell us some of the financial issues focus on a police forfeiture fund, and as much as $315,000 in unaccounted money.

I for one am glad WLOX has caught up with local happenings here in beautiful Mayberry-by-the-Sea, named by numerous travel magazines that few people read and even fewer take seriously as one of the coolest Mayberries in this entire nation. Its also broke and under investigation but what a few hundred thousand dollars of misspent Drug Forfeiture funds between friends and neighbors to go with all the other misspending?

That said with Stacey Pickering’s people lurking about Eye Spy, a veteran of sorts of State Auditor’s Office Investigations checked in yesterday with some good advice: Continue reading “Come join Hizzoner on the magic carpet…..”

Comment Bump: Here’s more culture of corruption for ya Stacey. ;-)

I would argue that the audit approach of the Office of the State Auditor, Financial Audit and Compliance Division, County Audit Section with regards to non-compliance with GASB 61 is fundamentally flawed:

The Financial and Compliance Audit Division, the largest division in the agency, is divided into five sections: Education Audit Section, State Agency Audit Section, County Audit Section, Electronic Data Processing (EDP) Audit Section and Report Processing Section. This division is responsible for conducting and overseeing audits of public entities.

Facebook Photo | SRHS Queen Stephanie Barnes Taylor
Facebook Photo | SRHS Legal Services Queen and Chief Compliance Officer Stephanie Barnes Taylor

The audit and inherent risks contained in the County audit is at owned hospital component units for those counties that have them, as they are magnitudes larger financially than the primary government. They have also been allowed to operate in secret by law, which is a red flag in my opinion in terms of fraud risk assessment. As a matter of Governmental GAAP, this would be one of the basic reasons GASB 34 (now GASB 61) was promulgated as the overall financial risk would lie with the larger entity, oftentimes a “component unit” whose failure would cause far more financial carnage than the failure of the primary government. We’re seeing this play out over in Jackson County right now.

Currently in Mississippi, the Auditors office allows the counties to not consolidate their component unit hospitals, Forrest Co and Jackson Co being two examples, with the OSA or private county audit firm expressing adverse opinion on the component unit column of a multi-column financial presentation. The opinion is so complicated as to be next to worthless to all but the CPA practitioner community and lawyers.

To the extent the taxpayer backed financial guarantee related to their hospitals at the county level is material to the Primary government and unrecognized, County auditors are skating on very thin ice from a liability standpoint with such a presentation, which I would argue is fundamentally misleading. I would hope the gang up in Jackson would be having this discussion internally but based on an Anita Lee story from a few months back my guess would be no for reasons I will not elaborate upon. I’d be happy to be proven wrong there.

None of this is a comment bump folks but I needed Mr. Pickering’s attention. I’d like to point out all these cultures of corruption are happening on your charge and watch sir. From chat gres in comments:

Back to SRHS and the compliance department.

Stephanie Barnes Taylor was the Chief of Legal Services and the Compliance Officer for SRHS until 2014.

In 2010 SBT founded The Fruition Group LLC. Continue reading “Comment Bump: Here’s more culture of corruption for ya Stacey. ;-)”

Will someone please get the DMR and Bill Walker outta the real estate business.

Suspension of disbelief

Suspension of disbelief or willing suspension of disbelief is a term coined in 1817 by the poet and aesthetic philosopher Samuel Taylor Coleridge, who suggested that if a writer could infuse a “human interest and a semblance of truth” into a fantastic tale, the reader would suspend judgment concerning the implausibility of the narrative.

Land swap for marina questioned by developer. ~ Mary Perez

So the DMR is actually considering swapping Harbor Landing, which taxpayers bought from the taxpayer real estate king David Harris for over $3.6 million plus 18 months of free use for a piece of larger parcel of undeveloped land on the Biloxi waterfront the owers could not sell in total for $2.5 million. This folks, sounds like DMR Director Dr Bill Walker math to me, but then again maybe that is why the Office of the State Auditor had investigators crawling all over Walker’s office around a week ago. I hear the OSA has taken an interest in taxpayer funded real estate transactions across the coast in fact. From my vantage point this area is indeed rich in scams and rife with fraud.

If there is one place that has more leaks than the Yenni Building that would be the Bolton Building

I was there on business just a few weeks ago and actually know a few of the inhabitants. I mention this because the Sun Herald has a connection or two there as well as Donna Harris and photojournalist John Fitzhugh showed up yesterday at Bolton while a few folks from the investigative division of the State Auditor’s office were holed up in DMR executive director Bill Walker’s office going through his files and computer hard disks.

Naturally the rumor mill is going full tilt and I shook the tree to get the low down, which I did on an off the record basis.  As the comments to Harris’ story illustrate, most everyone knows Bill Walker has double dealt most every chance he’s had while at DMR enriching himself and his cronies at the taxpayer trough for years.  There was the Cedar Point land swindle involving David Harris and Ben Stone funded by the Jackson County taxpayers for instance.  More recently we have Walker and DMR playing Santa Claus for Harris on a sweat heart land deal to create green space on the Ocean Springs waterfront, bailing Harris out of a previously money losing investment with taxpayer funded largess.  And since the oil spill we’ve watched Walker try to get control over Mississippi’s portion of the BP fines via the DMR, no doubt with an eye towards self enrichment as that issue almost scuttled his renomination as DMR Director earlier this year.

Let’s be clear, the Investigators with the OSA are not the FBI and the OSA typically pursues civil rather than criminal remedies. That said I do not think they’ll have to look very hard to figure out what DMR is about in its new role as Santa to the politically connected.  To the extent Walker is highly connected in statewide GOP circles, the fact this investigation was green lit by the powers that be is telling.  Stay tuned.