Prince Edward to lead forensic audit of Crossroads
Frustrated by a decision from the Board of Directors of the Crossroads Community Services Board to derail a forensic audit, Prince Edward County’s Board of Supervisors has decided to take matters into its own hands.
County Administrator Doug Stanley said during the board’s Tuesday, Aug. 10, monthly meeting that state code (Section 15.2-407c) permits him as county administrator to begin a forensic audit of Crossroads since the organization is an agency of the county.
“The county administrator shall, if the board requires, examine regularly the books and papers of each department, officer and agency of the county and report to the board the condition in which he finds them and other such information as the board may direct,” Stanley said reading the state code. “As an agency of the county, if the board directs me as county administrator to examine the financial records of the Crossroads CSB, then I would proceed with the phase one forensic audit as outlined.”
The board unanimously approved the request to have Stanley initiate the forensic audit.
Stanley said he would also reach out to the four other area counties who passed resolutions in favor of a forensic audit to ask them to share the cost of the audit. Prince Edward’s plan to fund the audit is to deduct the cost of any audit from the county’s $60,000 budgeted contribution to Crossroads.
Phase one of the proposed forensic audit would look for anything out of the ordinary in Crossroads’ financial records the past three years. Stanley said phase one of the county’s forensic audit of Crossroads would provide a written report of any findings of fraud or misfeasance, breaches of internal control or lack of controls. If any issues are found in phase one of the audit, the process will continue to a second phase.
The cost for the first phase of the audit is anticipated to be between $15,000 to $20,000.
Stanley explained to the board that after initially agreeing to the forensic audit and appointing an audit ad hoc committee to find a company to perform the audit, the Crossroads board voted to disband the ad hoc committee at its last meeting and put out requests for proposal for not only a forensic audit, but for a financial statement audit as well. He explained the RFP confuses the issue as the two audits are designed to accomplish two very different outcomes.
“The purpose of a forensic audit is to look for instances of fraud and to derive evidence to be used in a court of law or legal proceeding,” Stanley said. “A financial audit reviews the financial statements to assure the public that they are in compliance with the governing standards. A CPA firm that conducts financial audits will be in conflict with rules of independence by also conducting a forensic audit of the same client.”
The idea of conducting a forensic audit of Crossroads originated with the Prince Edward Board of Supervisors after it was revealed the organization received a $2.4 million Payroll Protection Plan loan from the federal government during the pandemic. The loan has since been forgiven.
Supervisor Dr. Odessa Pride, who also serves as one of two Prince Edward County representatives on the Crossroads Board of Directors, said a forensic audit should help clear the slate for a new executive director of the organization.
The Crossroads board voted to dismiss former Executive Director Susan Baker in May and is currently conducting a search to find a new director.
“It is a big mess,” Pride said of the situation with the Crossroads board. “What I have tried to reiterate over and over, when you are looking for a new executive director, this audit is needed,” Pride told the other supervisors. “When you are looking for a new executive director, you need to have that record clear before this person comes in.”
Prince Edward County Chairman David Emert agreed the county proceeding with the forensic audit of the Crossroads is the correct path to take.
“I think that as a board we benefit from this taking place regardless if it shows up clean, whether it shows up dirty, it doesn’t make any difference,” Emert said. “It will help them (Crossroads) also… to be able to hire someone.”