Fort Thomas approved a forensic audit of the past three fiscal years in an effort to trace $322,000 it previously wrote off.
The Fort Thomas City Council on Tuesday approved hiring public accounting firm Dean Dorton for just under $35,000 to conduct a forensic audit.
The city sparked controversy last September when LINK nky reported that Fort Thomas had to write off $322,000 as an “error of the past” following an audit, which revealed major accounting issues. The financial review found that $322,000 was unaccounted for. The city said there was no reason to believe it had been misappropriated; it was attributed to bad accounting practices.
“One thing they did mention is that when they get into this, if they figure it out really quickly and figure out what the issue is, then they’re going to stop,” Fort Thomas City Administrator Matt Kremer said. They’re not going to go through the $35,000 unless they have to.”
If the audit takes the full amount of time, it will be a six-week process. Then Dean Dorton will come back to the council with its findings.
According to the city’s request for proposal, the firm will review and analyze all relevant general ledger entries, financial statements, bank reconciliations and journal entries related to the $322,498 discrepancy.
They will investigate and trace transactions within the general fund to determine the origin of accounting errors up to three years prior to the 2023-2024 audit and provide a written forensic audit report detailing findings, conclusions and recommendations.
“We have a new mayor, we have a new council, and I think this is a nice way to hopefully push that forward, so that we can start regaining some trust back with people, to show that we are reviewing things and taking it seriously,” Fort Thomas Councilmember Adam Blau said.
New Fort Thomas City Attorney Brandon Voelker said at the meeting that when an auditor senses an issue, they prepare what’s called a management letter. That is then supposed to be given to the city administrator and/or mayor. However, Voelker said the previous auditor the city used (Rankin and Rankin) gave that letter to the person subject to said management letter.
He said it is a proverbial fox guarding the henhouse.
“When Brandon got here, one of the first things we discussed was the ability we have to go back after Rankin and Rankin,” Kremer said. “He [Voelker] did some research and feels pretty confident that we can go back against their insurance at the time, just because they obviously didn’t do their job.”
Fort Thomas Councilmember Brad Fennell said that he didn’t want the forensic audit to be a “symbolic audit.”
“If they’re going to tell us ‘No criminalistic behavior,’ we already know that,” Fennell said. “I need to get something more out of this than just that, meaning that our internal controls need to be revised, all this stuff that they say they’re going to do in the final report.”
Fort Thomas City Councilmember Eric Strange, who was on the committee that interviewed the firms, said the city will receive a second check on the audit conducted by Certified Public Accountant and Partner John Chamberlin, of Erlanger-based Chamberlin Owen, who conducted the 2023/2024 and 2024/2025 fiscal year audits.
He said the city will also get an opinion on whether its controls are effective and/or suggestions to make them effective and ensure that if there was fraud in the three-year window, the forensic audit would find it.