Pr. William county could eliminate internal watchdog

November 26, 2012

The Prince William Board of County Supervisors is expected to vote Tuesday to eliminate the county’s internal auditor department and outsource the work to a contractor, a move that critics charge would deprive the county of an internal, independent watchdog.

In a strongly worded memo, the county’s auditing department said the plan would undercut the county’s credibility and bring in outsiders who are not familiar with the complicated workings of the government, which has an operating budget of $914 million.

“The public should be able to have confidence that there is a genuinely independent internal audit function,” read the memo, which was obtained by The Washington Post.

If the job is outsourced, “taxpayers will never be able to count on learning the truth about what may be going wrong in the county.” The memo also said the plan “would give taxpayers the impression of a county’s desire to not shed light on potentially embarrassing audit findings that could also look bad to regulators or rating agencies.”

Board Chairman Corey A. Stewart (R-At Large), who is also chairman of the Board Audit Committee that oversees the audit department, defended the proposal, saying that change is necessary because the county’s internal auditors did not answer questions or complete audits in a timely fashion. He said that a large outside contractor could also oversee a greater range of audits because it has the personnel and expertise to do so.

He said the outside contractor, McGladrey, which has already been hired, would still report to the board’s audit committee.

Stewart said that the county would hire one internal audit official to oversee McGladrey’s contract, ensuring independence.

“We wanted to make sure it directly answered to the board,” Stewart said. “The job just wasn’t getting done, in my view.”

The audit department is led by Acting Director Lawrence R. Keller, who declined to comment on Monday.

County Executive Melissa S. Peacor said in an e-mail that officials have been working to overhaul the department for about a year, and that because the contractor would report to the board, it could independently audit county functions.

“My office will not be in any chain of command of the audit function or in managing the contract or selecting the audit targets,” Peacor said. “So, yes, a contracted function can be independent.”

The idea for getting rid of the county’s audit department came during a Sept. 25 meeting, when auditors presented an unfavorable report about a county pension program to supervisors on the audit board, according to the auditors’ memo. It said the potentially embarrassing audit was complete but that members of the board’s audit committee labeled it incomplete “in order to justify holding it” from public view.

“The report was not held back for just cause,” the memo said.

Stewart and Peacor denied that, saying the audit was not released because it was incomplete, not because it delivered bad news.

“The findings are not completely wrong. The findings are just incomplete in terms of the detail,” Stewart said of the audit, which deals with a pension program that pays small benefits to longtime volunteer firefighters.

County officials familiar with the pension audit, who declined to be named because the audit has not been made public, said that it detailed the mismanagement of a $9 million pension program that has cost the county about $1 million a year more than intended.

The report also raised questions about whether the program was properly overseen by volunteer fire companies charged with handling the fund.

Tuesday’s vote has been placed on the board’s “consent” agenda, where routine items are generally passed unanimously and garner little discussion.

Stewart said that Tuesday’s vote on the audit department should not come as a surprise. The board voted Sept. 25 to have McGladrey, the contractor, which had been working with the county auditors on a part-time basis, assess whether the department should be fully privatized.

Since then, Peacor said the county’s human resources incorporated the company’s findings into a report concluding that the audit department should be privatized.

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