Blame the Auditor!

There is an interesting debate ensuing in Austin County, Texas. The former Austin County Tax Assessor-Collector was arrested on Jan. 17, 2017, for first-degree felony theft by a public servant.  Full story.

Precinct 4 Commissioner Douglas King asked if the current auditing company on the books for the county should be held responsible. Someone is to blame, right?

“I don’t know enough about what they should have or should not have found, or what their internal audit [was like last year] that they did not catch whatever the scenario was here,” King said. “Without knowing all the particulars and things of that sort, then it puts [us] at a little bit of a disadvantage.”

The most important part of the quote above is "I don't know enough..." Which I read as:

Someone is to blame, I don't know who, so let's blame the auditor. It's convenient, seems plausible, and maybe the citizens will buy it.

Dear Mr. King, it is very difficult for Internal Audit to identify fraud unless a project is specifically scoped to look for it, and even then it is difficult. Internal Audit's role is to evaluate how well management evaluates and controls risk. Most internal audit work is completed by interview and sample testing. In order for the internal auditor to uncover fraud it would require a forensic analysis on 100% of the transactions and an understanding of all conflicts of interest and all potential fraud scenarios. Plus if there is collusion involved, they'll never find it.

Before you look at the auditor for blame, first look inside the county and its management personnel. It is management's responsibility to manage risk, including the risk of fraud. You may also want to look in the mirror, because as an elected official it is essentially your responsibility to make sure the government is serving the best interest of the citizens.

Life Lessons:

• Think before you speak.
• Formulate opinions based on fact, not speculation.