Is the County Executive once again obstructing the Internal Auditor from performing her duties? On the Friday July 17 edition of OPEN AGENDA (S3 E38) we discuss Julie Giordano's latest escapade in regard to a recent audit of the county's handling of state grant funds. The audit could not be completed because the administration refused to submit the supporting documentation requested by the Internal Auditor. The Executive's obligation to provide these documents is clearly established in the County Charter. Although the County Council can subpoena the documents, their only enforcement mechanism is to sue the Executive at taxpayer expense. So Ms. Giordano simply continues to willfully disregard the Charter and refuses to be transparent. The question is, “WHY?” Could she be hiding something in particular, or is she just concerned about what “unknowns” might be discovered that would reflect badly on her administration? As you will see, this isn't the first time the Executive has stonewalled audits or failed to be forthcoming in financial reporting. In fact, she has done this time and time again in the apparent belief that she has unconstrained power and is exempt from oversight or scrutiny. But thankfully, voters are beginning to see through the smoke screen and are discovering that the empress has no clothes.
Open Agenda TV S3 E38 Did County Executive Obstruct Audit?
Show Transcript
Disclaimer: The following transcript was auto-generated and may contain spelling or contextual errors.
You're watching Open Agenda. Here's your
host, Mike Goldberg.
Welcome to Open Agenda. I'm your host,
Mike Goldberg. I'm joined today by Trish
Melvin of Fruitland and Jim Atkins of
Mardella. Thanks for being here.
>> Today, we're going to talk about an
internal audit that took place uh with
respect to state grant money that has
been filtered through the county. I'm
the internal auditor on Julie Chhatel
and I would like to present resolution
1172026
acknowledging the grants audit report.
So I attempted to uh conduct an audit of
grants in Wakamo County. The focus of
the exercise was to evaluate the
controls designed to manage risks
related to grant management in the
county. Um I was unable to offer a
conclusion level um or management
recommendations at this time. And I can
uh these are generally grants that are
federal grants or state grants. Um so um
I I requested for 52 lines. I received
none of the um supports for any of those
52.
>> So they didn't respond to 52 requests.
>> It uh it it was one request with 52
account numbers.
>> Items. Yeah. Okay.
>> But the audit was inconclusive because
very little or no uh supporting
documentation. Yeah. I should say
absolutely no documentation was uh was
provided u to the internal auditor
despite the fact that it was requested.
Wakcomo County has administered
approximately $33 million in state
grants over the past couple of years. Uh
upcoming on July 21st at 10:00 a.m. in
the government office building, there is
going to be a work session with the
council and the county's grant
administrator, Lorie Carter, to discuss
these grants and the audits thereof, try
to get to the bottom of some of the
problems that the county has has been
experiencing here. Jim, tell me, why do
we even have an internal auditor?
Well, back in 2008,
the public works road department when
they were doing their budget and and
reviewing with the council, [snorts]
there was a a large
increase in the amount of uh supplies
and diesel fuel that the uh public works
was using. Uh, of course they had
answers when the council asked them why
the big increase. They had answers.
But shortly after that, it was
discovered that uh
there were some people in the county who
were uh filling up their their trucks
with diesel fuel. Uh that didn't work
for the county.
>> I've been asked why I dwell on this so
hard. About 18 years ago, we were in
budget session
and
in the budget book, it showed this large
increase in diesel fuel usage at our
landfill.
Well, myself and I think Mr. Cannon, we
both questioned that
and we it was explained to us that it
was due to the cost of diesel fuel
increasing, which is was true.
Information came from the public works
director at that time.
But we took their word for it. We didn't
follow up on it. We failed the citizens
of Wakcomo County that time because we
found out a few months later that there
was, if the information that was
supplied to me was correct, that there
was over $450,000
worth of diesel fuel and other items
stolen from the landfill.
So that's why I have been dwelling on
this issue. when you have an and that's
why we ended up with an internal
auditor. The um fraud auditor at that
time suggested that the county have an
internal auditor. Now, this is state
money. This isn't county money. With the
landfill issue, it was our county money.
This is state money, but we've been
charged with overseeing it. You know,
we're stewards of that money.
>> $400,000 that they uh ended up losing.
Uh they convicted a couple people.
uh the county at its finest allowed the
uh the director of public works at that
time to resign uh before there was an
investigation. So, you know, he he got
out of the way real quick. And uh the
county council, they decided at that
point in time that they needed to be
able to go in and check figures when
people when there were
discrepancies in in money's being spent
or increases in money being spent over
the previous year. They felt like they
needed to know why after seeing what had
happened there. Lack of control,
basically. Lack of control. Well, one of
the one and one of the big points that
the county executive made about this
county auditor, the current county
executive,
that was a falsehood when she made it.
The county auditor council auditor
auditors audits everyone. The executive
branch and the county council. One of
the comments made by by the executive's
office was the fact that you there was a
personal bias on your part unfounded and
yet you know you're here today and you
seem to be trying to assist with every
aspect you can to make this happen
and the executive took it as the council
was trying to to see what was going on
in the executive branch but they weren't
doing anything. That's not the county
auditor's purview. She audits anything
that she sees that she thinks may be a
problem.
>> And there's a history, not with this
executive, but in the county, there's a
history of weak financial oversight.
Yes.
>> Uh which means all the more reason that
audits are important and should be
thorough.
It's our tax money and if there's not
enough of it and there's not enough
grant money, if we lose grants because
they are not being properly administered
and that leaves our local government
very little choice but to uh uh but to
increase taxes and nobody wants to see
that. We'll talk about this a little bit
more in our next segment. So stick with
us. We'll be right back. You're watching
Open Agenda.
Welcome back to Open Agenda. Thanks for
sticking with us. Uh our topic of
discussion today is going to be
resolution number 117206
that was discussed at the June 16th
county council meeting to acknowledge an
audit report that was prepared by the
county uh internal auditor Anelie
Chhatel.
>> I was unable to offer a conclusion level
um or management recommendations at this
time. an exhibit. Um it's a memo from uh
from myself, the internal auditor, uh
follow-up to the management response in
the grants audit. Um because they they
did submit a response as you can see in
there with multiple exhibits. And then
the audit committee chair also uh
created a letter um the concerns
regarding management responses to audit
reports.
>> Why don't you go into the details
>> of of the objectives or the Okay. Okay,
so the objectives were to evaluate
controls designed to manage risks
related to effectively and efficiently
using resources compliance with
accounting policies and agreements with
grantors and reporting accurate reliable
information related to grant income and
expenditures and then I would make
recommendations if appropriate based on
those evaluations. Uh these are
generally grants that are federal grants
or state grants. Um
>> I guess so the word of the day is you
said you attempted so apparently you
weren't successful.
>> Um so so I received some documents from
management and so I was able to do what
I call like the risk review segment of
an audit. I'm supposed to do a risk
assessment at the beginning of every
audit. And then there's the part where I
actually do like testing looking at
support documents to compare to
evaluation criteria whether it's
policies of the department or law um or
or a framework a control framework. So
uh that is where I was uh so the second
part is where I was not able to receive
the documents that were requested um for
for the testing. So that's why I use the
word attempted to because I didn't
actually look at those support
documents.
>> You said you weren't able to receive
them. Why why weren't you able to
receive them? Um,
when you look at the management
response, um, based on my interpretation
of the response, it it seems like
because I didn't CC
other people, that might have been why
um,
what I was told at the entrance
conference, the the the second entrance
conference, um, it it in my opinion, it
sort of conflicts with what the
management response says. Um and there's
in management response they actually
have an exhibit in there one um from
emergency
um exhibit E. Um
it says um
I was never given a list or approached
as that is the same time frame that Miss
Carter became the point person for
grants. So I feel that that supports
that I was told to send the requests to
um the grant administrator rather than
individual departments but it seems from
the management response that I didn't
send them to the individual departments
and that's why I didn't get them. I
that's what based on my interpretation
of their response.
>> So you were told to do it one way and
you did it that way but then when you
did it that way you were told it should
be done another way.
>> That seems to be what has happened in
the management response that that that
might be what they're saying. How much
information was withheld?
>> So, um I I requested for 52 lines. I
received none of the um supports for any
of those 52.
>> So, they didn't respond to 52 requests.
It
>> uh it it was one request with 52
>> account numbers items. Yeah. Okay.
>> Well, her response to the audit
[clears throat] was that she did not
think the auditor had uh contacted the
appropriate department heads. And uh
we've seen this before with other audits
that they claim that uh the internal
auditor is not contacting the
appropriate people. I have a serious
problem with that because an auditor
should be contacting
the executive or the CEO
of the corporation that they're dealing
with and telling them why they are
there. And then the executive or the CEO
should be making their people available
to the auditor. It is not the auditor's
job to run around to every department
and say, "I'm here to do this." We all
come out of the business world. We've
all been involved in audits and what
you're describing is pretty much, you
know, standard operating procedure. you
have a single point of contact and it is
incumbent upon that person who I believe
in this case is actually the grants
administrator Lorie Carter to u to reach
out to the uh the various department
heads or other officers of the county
who have the information or have the the
documents that are necessary. But don't
you think it's kind of ridiculous to
have uh different department to to have
the the uh county auditor having to
chase down a whole bunch of different
folks to get the information that she
needs. It seems like there was an
initial kickoff meeting where the
process was laid out um some time ago,
>> but since then the requirements seem to
be vague andor changing and shifting on
the auditor and making it difficult for
her to comply.
>> When you do your entrance meeting, I
think that's what you call it. That's
when you describe the process and have
some back and forth I guess or tweaks at
least explain uh all the information all
the data that's going to be required and
the processes that they're they're going
to be uh that you're going to need. So I
think that that should be clearly uh all
uh explained in in that entrance uh
entrance meeting.
>> Yeah. And um I've I've started to uh
create a process uh where I record so
we're doing the meetings virtually uh
going forward the entrance the findings
meeting and then the exit meeting uh
through u Microsoft teams with it
recording and transcription so that um
you know everybody can get a copy of the
transcript um and there so it's more
clear you know was this said was this
not said
>> why were these issues not spelled out
clearly at the kickoff and for people to
follow.
>> To the best of my knowledge, and Jim,
correct me if I'm wrong, that at the
kickoff meeting that the the process for
conducting this audit was in fact laid
out there. It should have been pretty
clear to everybody what their
responsibilities, what their obligations
were. Uh it just it seems that perhaps
the executive branch simply chose not to
to follow those procedures. they don't
want to follow it up and it's just like
the audit that uh
preceded this one with the uh with the
gift cards and uh they claimed that
everything had to be addressed through
the department of finance and uh the
auditor when she made that presentation
to the uh council
had two pages
of
emails that she had sent to the people
the responses they had given her or lack
of responses. She had done everything
she had been asked to do in regard to
the grants. Um, I understand the fact
that there's a lot of issues and
concerns right now with how grants are
being done and the fact that uh the
impression on the part of the council
was no doubt that the internal auditor
was stonewalled
when she was attempting to get all the
information she needed and we sent those
type of concerns to the executive
branch. So, we will be having a work
session with the with the grants
administrator. She's actually Lori
Carter. She's actually very anxious to
sit with the council to try to go over
where they are with the grant process
and what what delays there are if any
and what all the concerns may or may be
on the part of the council. So you can
go back to and I know a lot of people
are tired of hearing about it but you go
back to Safari at the quarry and the
audit
one of the first audits that our
internal auditor did and this is a
pattern from from that point forward.
The executive branch does not want to
supply any information and instead of
using an audit to make your operation
better to find out where your mistakes
are and what you can do to improve it,
it's like they're hiding something and
they don't want anybody to see it. Uh
Joe, I just have Joe John I had a
thought. Why don't we request a close
session with the executive branch and
the finance department and with an Ali
Chhatel so that we can iron this stuff
out to make sure that we're all on the
same page here because clearly someone's
missing the mark and we're not
understanding something.
>> I don't dis I disagree with you James. I
don't think it should be closed.
>> Well, if you're talking about personnel
issues, Joe
>> Well, that's not personnel. That's not a
personal issue.
>> Personnel issue.
>> No, it's not. How's it a personality
issue?
>> How do you know?
>> It's not personnel issue. I think I
think I think I think it is worthy of an
open work session.
>> Okay.
>> The topic of discussion uh any of the
items that we feel may involve personnel
issues uh prior to the meeting, Mr.
Benson could clearly help us with that
and we could have an open work session
for whatever portions was necessary
because the public needs to know. We
don't do this. Yeah. And then if there's
actually personnel matters that could be
an issue, then we would we could go into
closing. That's my that's my concern is
if it is a personel if there is
personnel issues that obviously that
should be in a closed session but if
it's not then by all means let's do it
right here.
>> Yeah. Well, in many instances, it could
appear to be a personnel matter because
if you have inefficiencies in a
department, I'm sorry, but you have to
explain that publicly. Y
>> and you know, either the department head
or individuals within that department
may may feel as if you know, they've
been singled out, but that's you know,
when you're that's just the nature of
doing business in a government
environment. It it it just seems to me
that we need to have some sort of work
session um so that we get this ironed
out cuz clearly like I said we're
someone's missing the mark here.
>> Well, yeah. And you're not you're not
wrong. Um this has been going how long
has this been going on since you first
began this? It's been over
>> has it been two years? And the more you
deny an auditor the information they're
looking for, the guiltier you look,
whether you've done anything or not, you
look, the perception is something's not
right and the auditor can't do an audit.
>> Well, the auditor's job isn't to to to
be a conduit for a gotcha moment. No,
>> it's to find, you know, any uh
deficiencies in the system that can be
corrected and the auditor would
typically propose uh, you know, some
means or methods to correct any of those
deficiencies.
>> The inter internal auditor is an asset
to this county that the executive branch
just cannot comprehend that they're an
asset. And I really think that the
reason they can't comprehend that is
because it's a internal auditor from the
county council and the executive branch
has a problem with anything that the
county council tries to do.
>> And what a lot of folks may not
understand is that every department head
in the county government actually
reports ultimately to the county
executive with the uh I believe the sole
exception being the internal auditor. So
the the internal auditor uh does report
to the county council, but there's also
oversight by an audit commission, an
independent audit commission. And the
chairman of that audit commission had a
few issues with the lack of cooperation
uh that was being provided to the
auditor and even wrote a letter.
>> I read the letter from Mr. Kaplan, I
think it was
um from your review board, the audit
review board.
>> Oh, Capen. Yes,
>> Capen. Capen. Um I don't think I've seen
quite a letter like that
that critical of I I don't understand
why there's such a divisive
um situation here between
management, county executive's office,
or whatever you want to call it, and the
county internal auditor. know what your
purpose is. You would think they would
welcome I guess nobody welcomes an
audit, but you'd think they would
welcome an audit that was trying to
improve the operations and um but that's
doesn't seem to be the case. And when
[clears throat] that happens, it always
creates a sense of doubt, I think, with
the citizens
>> and the auditor herself acts in a a
professional manner based on everything
I've seen. Um, Councilman Enis brought
up the fact that these excuses for not
[snorts] cooperating and they are
excuses. Um, they don't rise to the
level of obstructing an audit, you know,
who's copied, uh, whether finance
department is copied on a memo. These
are not reasons. These are insignificant
excuses um because somebody doesn't want
to comply with the audit. Why do you
think that the executive branch seems to
be unwilling to comply?
>> Well, it could be any number of reasons.
The best case scenario would be lack of
process,
um,
incompetence,
um, and then the worst case is, you
know, you can go from there.
I think it should also be pointed out
that the county charter compels the
executive branch to provide any
supporting documentation that is
requested by the internal auditor and in
this case it certainly was not provided.
This is why the audit could not be
completed.
>> I' I'd like to see this wrapped up by
the last meeting in November. However,
that has to happen through subpoena
uh working together with people. Um
it's absolutely ridiculous that this has
taken this long and as Councilman
Holloway said, this creates doubt by not
answering questions. It gives the
impression you might be hiding
something. So, um I think there's a word
for that. I think it's called
transparency.
Um, we need to get the information that
you need to do your job.
>> And and the the county council does have
subpoena power, but it's my
understanding that the only way to
enforce a subpoena is to file a lawsuit.
And the, you know, a lawsuit's going to
cost the county money.
>> And I think that the county executive
understands that. And then it puts the
executive in a position to say, "Hey,
look at all the money they're spending
needlessly,
>> but it's not needless. It's to enforce
the terms of the the county charter."
Clearly, there's been a a lack of
accountability here. And uh I think that
lack of accountability has extended into
other areas. Just for instance, the
recent uh trip to Las Vegas that the
county executive took along with the
director of administration and the
deputy director of administration. I
think we should probably examine that a
little bit further because you know we
we are seeing the same problem
infiltrate various different issues. So
we'll talk about that uh when we come
back for our third segment. Stick with
us. You're watching Open Agenda.
Welcome back to Open Agenda. I'm your
host, Mike Goldberg. I'm joined today by
our panelists, Trish Melvin from
Futland. Thanks for being here, Trish.
>> Good to be here.
>> And Jim Atkins from Ardella Spring.
Appreciate appreciate you being here,
Jim. Uh, as we mentioned just a short
while ago that the county executive had
recently taken a trip to Las Vegas uh,
for the purpose supposedly of developing
some a retail sector to bring more
retail businesses, you know, here to to
Salsbury and and Wcomako County. Uh she
was joined on that by the director of
administration Monkey Lman and the
deputy director of administration Steve
Laken. Good evening, Robert Taylor, a
county resident. Uh but I too am
interested in the um junket that the
county executive took to Las Vegas a
couple of months ago with, as I
understand, two other county employees.
I believe the director of administration
and the assistant director. I could be
wrong about that. I could also be wrong
about that all being done on the
taxpayers's dime, meaning by county
funds. Uh, we ought to know how much,
why, what, why did it happen, and I know
what happens in Vegas stays in Vegas,
but we ought to know that, too.
>> Um, I'm not sure how much money was
spent on this, but when you consider the
cost of hotel rooms, the cost of
flights, meals, it was a considerable
amount of money. But that is not a
matter of public record.
>> I I think it is a matter of public
record.
>> If you do if you do a PIA on it, you you
can do it because you it's it's
something that you should not have to
jump through hoops to get the
information.
>> But to get information, we constantly
have to jump through hoops and there are
costs associated very frequently with uh
getting a PIA request fulfilled.
>> Yeah. They only give you so much
research time for free and then after
that you're you're paying to over bill
you. Yes.
>> At an attorney's rate even though they
have a clerk clerk doing it and uh yeah
but that's another topic for another
day.
>> Has the executive branch offered that
this trip was sponsored by a third party
perhaps?
>> Not to to my my knowledge. So you once
again we don't know what the real
purpose was. Was there a real purpose
here or was this just a vacation? And
why hasn't the county executive just
simply come out and say, "Hey, we spent
$10,000 to make this trip and here's
what we got for our county as a result
of that trip." I I don't recall any of
that. to do. If I attended a convention
or went to a meeting, I would be
required to write a report what I what I
gained from it and to justify any future
conventions I may want to attend back
[clears throat] when I was working.
>> But this seems there seems to be a some
consistency here, you know, with respect
to the county executive not being
forthcoming with information. You had
mentioned Safari at the quarry. There
was an audit there, but there was no
supporting documentation whatsoever. And
there was an economic impact statement
uh that likewise had no supporting
documentation. So, this is a recurring
theme from the executive. I'm going to
do what I want to do, but I'm not going
to tell you why I did it or how much
money we made or more importantly, how
much money we we lost. Well, you know,
these types of trips,
the
Las Vegas trip,
the bond trips each year to New York
City. Now, the bond trips in in in my
world.
The [clears throat] world has changed.
They're video conferences now. Should be
able to do video conference. Should be
able to stay in Salsbury and do a
conference. But even if
we need representation in person,
my problem is why do we always need
three people to go represent the county?
We we have a executive, an
administrator, and a deputy
administrator. And whenever one of these
junkets is taken,
they all go. With respect to the bond
raising trips to New York, wouldn't that
more appropriately just include perhaps
the executive and the director of
finance? Why do all of these
administrative, you know, personnel have
to go?
>> I have is how well is this known among
county taxpayers? I mean, I know we talk
about it, but um
>> it's not it's it's known amongst the
people who uh
>> attend the council meetings
>> or watch the people who watch them and
uh you know, but other than that, the
the majority of the community is not
aware of these things or just doesn't
care about these things. And and that's
the sad part about it. I mean, I I think
a
show like Las Vegas, if it had been a
trade show for bringing jobs and
businesses to the county, would have
been great. We've got the the property
at St. John's built at uh Nailaylor Mill
and 50
>> right next to the sheriff's office,
>> right in front of the sheriff's office.
Uh there's a second phase of that that's
supposed to be built which has been to
my understanding put on the back burner
now because the one building that was
built they had a tenant scheduled to
move in there who has now backed out of
that because of the current economy in
the county. So now we have no tenants
moving into that. I did the driveby a
few weeks ago and it looked like there
was two tenant spaces that uh were
undergoing tenant improvements, but they
were together. So, I'm assuming side by
side. So, I'm assuming that it was a
single tenant who had leased two spaces,
but otherwise all the rest of those
tenant spaces remain vacant. Well, it it
may be, and I'm just going based off
what uh a reliable person told me about
that building, that uh the only tenant
that was in there has backed out before
they moved in.
>> So,
>> well, that that's that's that is
interesting. You know, retail sector
follows
uh growth in other sectors. If you have
manufacturing, if you have warehouse do
distribution, you know, that's what
creates the jobs and it's what creates
the well-paying jobs. And it's only when
you have people coming here and they
have well-paying jobs and they can
afford to go shopping, that's where you
get the benefit from the retail sector.
That's about all we have time for today,
but we'll be back very soon with another
show. Thanks for joining us today. We'll
see you next time.
Almost have it there. [laughter]
