Prince William report raises issues, mistrust

December 3, 2012

A Prince William County pension plan for volunteer firefighters is under fire after a report revealed it has been mismanaged for years.

Some critics are also asking why the report is dated June 22 but wasn’t made public until last week by the Board of County Supervisors.

Board Chairman Corey A. Stewart (R-At Large) said the report wasn’t finalized because it was not yet accepted by supervisors on the three-member Board Audit Committee. A report must be accepted by the committee before it is made public, he said. Supervisors voted to make the report public Tuesday because of interest in its findings.

Stewart cited several questions that the board’s internal audit department would not answer that made the report incomplete, an account disputed by members of the audit department. Citing the unanswered questions and other issues with the county audit department, Stewart said the structure of the department needed to be overhauled.

Stewart and other board members, with the exception of Supervisor Frank J. Principi (D-Woodbridge), also voted Tuesday to privatize the internal audit department.

Principi voted against the move, saying an outside auditor might not be independent because the contract would need to be approved by county staff members.

John Gray, a former independent candidate who ran against Stewart for chairman last year, called for an investigation into the pension program and said he is suspicious that the audit’s findings weren’t revealed by assuring that the report was considered a “draft.”

“This whole fiasco is nothing but a coverup,” Gray said.

Fire and Rescue Chief Kevin McGee said he and other members of the Fire Rescue Association, which oversees the department, had not been able to get in touch with the pension plan’s administrator. The association requested the audit in November.

“It was a lingering question for a number of years,” McGee said of the pension program’s finances. “This really started out informally, and we increasingly made it more formal on our rescue association agenda and higher on the priority list, especially as we’re seeing the costs for the next year’s budget . . . [saying] here’s a cost we have no control over,” he said.

Among other issues, the pension audit found that the program had little oversight and that the trustees designated to oversee it rarely met. Expected returns in the designated Hartford pension account were also far below expectations, meaning that the “effective use of taxpayer dollars . . . have been consumed at a rate five times greater than anticipated,” according to the audit. That amount translated to $1 .3 million of unanticipated fire department funds going to the program during the past nine years, according to the audit.

Harry Wiggins, chairman of the county Democratic Committee, said that fire officials shouldn’t have been allowed to dip into other fire department funds without express authorization. “I think it’s fraud,” he said.

The Dale City Volunteer Fire Department had not paid $172,617 in expected contributions, and the defunct Gainesville District Volunteer Fire Department had been overpaid $30,215 for beneficiaries, according to the audit. The report says county officials are rectifying those problems.

Supervisors’ decision last week to eliminate the internal audit department and outsource the work has critics questioning whether the county is seeking to limit the independence of its sole internal watchdog.

Stewart spearheaded the measure to do away with the department. He called the department’s structure his “brainchild,” ensuring that the department was independent and reported to supervisors and not county management, as it had in the past.

He said Tuesday that the department was inefficient and ineffective and needed restructuring. Those claims have been disputed by the outgoing auditors.

Supervisor Peter K. Candland (R-Gainesville) has advocated for more transparency in county government. Candland said he voted for Stewart’s proposal to privatize the internal audit department based on the recommendation of the audit committee, whose members are the chairman and supervisors Maureen S. Caddigan (R-Potomac) and John D. Jenkins (D-Neabsco). The rest of the board is now included on the Board Audit Committee as alternate members.

Candland said that he doesn’t have concerns about the independence of outside auditors and that outsourcing is common in the private sector.

“I will be making sure I feel comfortable with the auditors . . . and if I don't feel comfortable, I will absolutely voice my concerns,” he said.

Candland said he is still pushing for a “taxpayer advocate” office in the county that would act more like an inspector general, assessing whether programs are effective and delivering reports to supervisors. Although auditors serve a key role in ensuring that programs are run legally and all funds are accounted for, Candland said, he would like for the position to be more aggressive about assessing whether tax money is being used wisely.

The advocate would be “somebody who really looks at efficiencies, looks at the way we’re spending money and be able to report to the board . . . is it effective?” he said.

McGladrey, a national tax and consulting firm that has been working part time for the county, will take over the job of the internal auditors. McGladrey has a long relationship with the county, mostly completing required external audits from fiscal 2006 to 2010 for a total cost of $2.6 million.

The firm was also given a contract in 2008 for a $30,525 study to look at the internal audit review process. That process was changed in 2009 so that the internal audit department reported to a committee made up of supervisors. The review was also used as a source of information for privatizing the department, county spokesman Jason Grant said.

The contract with the company is “open-ended,” meaning there is no set payment amount. Stewart said Tuesday that he expected the county to spend about the same on internal audit services as in the past. The internal audit department has a annual budget of about $750,000.

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