The Palm Coast City Council has requested education in forensic audits (either to conduct audits or to learn that audits can be prohibitively and unnecessarily expensive when there is no urgent reason to conduct them), and the Palm Coast City Government plans to award a contract for such education to Orlando-based MSL, PA. The accounting firm specializes in audits, including fraud and forensic audits, as well as business, tax and financial consulting.
It's unclear how many companies formally responded to a request for proposals the city put out last February, but only two qualified. MSL beat out Palatka-based accounting firm Carr, Riggs and Ingram, according to a notice of intent sent to the city late this afternoon. The City Council must then approve the decision.
To be sure, this ruling should not be confused as a step toward conducting a forensic audit: the city is only considering what such an audit would look like, and some city council members, and nearly everyone who has requested such an audit, are unaware of what a forensic audit would entail, how much it would cost, and whether an audit should even be conducted.
Per the bid documents, the presentation by MSL will “educate and inform City Council members about the costs, process and expected outcomes of conducting a forensic audit in a municipal context.” The presentation will help City Council members “make informed decisions regarding forensic audits and provide transparent information to their constituents,” while “the audit firm's insights will contribute to improving the City's financial accountability, transparency and overall governance.”
Nowhere in the tender documents does it suggest that MSL would carry out such an audit, but it will be up to council members to decide what direction to take after the council hears the presentation.
The city council is trying to balance fiscal responsibility and the reality on the ground with requests from a small number of residents for a forensic audit to be conducted, which is generally misinformed but sensational. Forensic audits are typically conducted when an organization suspects criminal wrongdoing or at least has evidence of wrongdoing. Neither the city council nor the administration knows anything close to that.
Residents in Palm Coast and Flagler County and beyond have gone before their local governments in recent years demanding forensic audits based on the assumption that something must be wrong. Several members of the Palm Coast City Council have made similar demands, including one who has been absent in recent months, who repeatedly implored city officials to call the local sheriff's office, state attorney's office, Florida Department of Law Enforcement or other agencies to report fraud in the city, as if he was convinced fraud was rampant. This person had no evidence and his statements were no different from smear campaigns at the expense of the city officials he was trying to win over.
Apparently no one notified law enforcement.
The City's books are subject to annual audits by an independent auditing firm. Unlike forensic audits, these audits sample the books rather than examining every transaction. But the audits have never had any problems. In fact, the Government Finance Officers Association of the United States and Canada has recognized the City for excellence in financial reporting for 22 consecutive years, winning the GFOA Award for Outstanding Achievement in Public Annual Financial Reporting for the past 10 years and the GFOA Award for Outstanding Budget Presentation for 20 consecutive years.
City officials made a point of highlighting this history in an announcement last March, shortly after the completion of their annual audit by accounting firm James Moore & Co., no doubt intended as a message to critics who have successfully smeared city officials’ reputations with innuendo without evidence and pressured the courts to “educate” them.
Last August, the council directed the administration to consider what a forensic audit would mean, but backed off a week later, when Councilman Nick Kulfus said, “To me, a forensic audit is essentially the same as calling there's a fire when you can't even point out the smoke.” There's still no smoke. Councilman Ed Danko continues to push for a forensic audit despite the reluctance of his fellow council members. (Both Kulfus and Danko are running for County Commission seats.)
The council is not expected to approve the MSL contract until late June, but could discuss the deal before then. The cost of the MSL contract has not yet been disclosed.
