Walton Commission told controversial 'audit' was not an audit, but a fraud investigation
SANTA ROSA BEACH — The Walton County Clerk of Court's Office and the County Commission remain at odds over a document that detailed thousands of dollars of potential spending abuses on the part of commission members.
The two sides can't even agree on what to call a report filed by Kelly Cornelius, the director of audit under Clerk of Court Alex Alford.
Since the report was made public June 30, commissioners and their attorney, Clay Adkinson, have criticized Alford for publishing a document without adhering to accepted audit standards, which would have included allowing commissioners to review abuses of the county's purchasing cards attributed to them.
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Though the clerk has been mostly silent in addressing the report itself, on Aug. 22 Alford's chief counsel, Sidney Noyes, wrote the county to inform officials the investigation done was not an audit.
The letter was in response to one written by Adkinson to Alford on Aug. 10, informing him, as the attorney had previously publicly stated, that an investigation of the purchasing cards should have been undertaken using established audit standards, that many of the findings in the report were flawed and calling for an apology to commissioners.
Noyes' letter notified Adkinson that Alford would meet with commissioners only after the Florida Department of Law Enforcement completes its review of the report's findings, which in the cases of commissioners Danny Glidewell and Trey Nick, documented more than 100 violations of existing policy.
"Mr. Alford looks forward to speaking with the Commissioners once FDLE completes its review and working cooperatively with the commissioners to address any issues identified," her letter said.
"I would like to clarify one matter in the hopes that it may dispel yours and the commissioners' confusion," Noyes' letter said. "It appears that you are operating under the mistaken assumption that the April 5, 2022 Report was an audit."
'An examination of potential asset misappropriation'
The letter explained the report filed constituted "an examination of potential asset misappropriation which was predicated upon an anonymous report to the clerk's fraud, waste, and abuse hotline."
Adkinson discussed the clerk's letter at Tuesday's County Commission meeting. The sarcasm in his voice made it clear the information Noyes had presented hadn't altered his thinking on the substance of the report.
"Apparently myself and you commissioners, in the clerk's opinion, are confused and operating under the mistaken assumption this was an audit," Adkinson said. "I must admit I assumed it was an audit because the word audit appears in the document 30 times. It was conducted by the director of internal audit."
Adkinson again reiterated "what we pointed out in the letter to the clerk is that they did not adhere to strict audit practice."
The cover sheet on the report itself, however, did not use the word audit, as alleged at Tuesday's meeting by Board Chairman Mike Barker, except to identify the department conducting the investigation. It stated the "examination" completed in April and made public two months later "was conducted in accordance with lawful fraud examination techniques."
Barker did not return a phone call seeking clarification of his statement.
Fraud examination techniques, the cover letter said, include, but are not limited to, examination of books and records, voluntary interviews of appropriate personnel and other such evidence-gathering procedures necessary under the circumstances.
In his letter to the Clerk of Court, Adkinson states that "it is my position" the examination conducted should have been performed using "Yellowbook" standards for government auditing.
A weblink he provided connects to a Yellowbook site that provides a guide to conducting "financial audits, attestation engagements, and reviews of financial statements."
"I along with the Board of County Commissioners remain deeply troubled that no opportunity for management responses were provided prior to the audit being completed and released to the public.," Adkinson said in his letter to Alford.
There also exists, however, a guide designed to assist corporate entities in conducting fraud examinations. The Fraud Examinations Manual, 2022 edition, coaches fraud examiners on planning and conducting their inquiries.
The guidelines call on fraud investigators to "restrict access to certain pieces of information on a need to know basis."
"Fraud investigations must be structured to preserve confidentiality," the manual advices, warning investigators to "avoid alerting the fraudster."
Nothing in the 387-page Fraud Examiners Manual appears to speak to addressing those being investigated either during or after the inquiry's completion.
Adkinson's lengthy letter to the clerk was replicated and sent to Alford on behalf of commissioners Glidewell, Barker and Tony Anderson. Each letter sent, Adkinson said at the meeting, included attached records designed "by and large to support this board's contention there was no misappropriation of funds or violation of policy, by and large."
Adkinson, Barker and Glidewell all commented at the meeting that had the clerk's office checked its own records system, investigators would have discovered much of the documentation reported as missing in the internal auditor's report.
But the clerk's report not only dinged commissioners for failing to properly record expenditures. The internal auditor also found violations of policy as they pertained to commissioner spending.
Report: 'No documentation was provided to justify the necessity of the charge'
The fraud examination documented unauthorized charges ranging from minor items like Commissioner Boots McCormick's $7.71 purchase at "Bootlegger's Bar and Liquor," to substantial purchases, such as Nick paying $7,085 for him and his aide, Scott Brannon, to attend the 2020 National Association of Counties Conference.
Nick's spending on the National Association of Counties Conference trip "was inconsistent when compared to other commissioners who attended," the internal auditor's report said. "One commissioner's rooms for himself and his aide was significantly more than the other attendees."
Two rooms booked by Nick rented for $683 per night each. The auditors presented a table with a comparison showing another commissioner's booking of $299 each per night. Nick also paid $811 on the same trip for a plane ride that was originally booked at $299.
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"Changes were made to the original flight reservations incurring additional fees of $850. Preferred seating fees of $174.80 were also incurred," the auditors reported. "Justification for the fees in excess of other travelers was not provided, nor was a travel voucher submitted."
County travel policy dictates that a traveling official will find the most economical lodgings available. It also states that the traveler will be responsible for covering the cost of "preferred seating" options and that the county will only reimburse at the coach level flight rate.
Neither Nick nor McCormick have yet submitted documentation rebutting the internal auditor's findings to the clerk's office.
Glidewell, Anderson, McCormick and Nick were all identified in the internal auditor's report as having claimed reimbursement for exercising preferred seating options over the audited time period.
Nick also was found by auditors to have received reimbursement for $182 in charges incurred in December 2019 at the Hilton Sandestin in Miramar Beach. Policy states that in-county travel will not be paid for with taxpayer dollars unless justification for the expense is provided. Nick lives in Freeport.
"No documentation was provided to justify the necessity of the charge," the auditors' report said.
The clerk's office initiated its examination into possible misappropriation of funds in January, according to the report, when an unidentified source reported that commissioners McCormick and Glidewell were abusing their privileges as elected officials by using county vehicles for their personal uses and obtaining mileage payment for their personal vehicles.
The reporting person also accused McCormick and Glidewell of driving their county vehicles to the liquor store and using their county-issued credit card to purchase alcohol.
Auditors uncovered no findings specific to the original allegations, though at a commission meeting McCormick did admit to using his county purchasing card to buy beers with a meal.
Auditors also identified two charges for attending the 2019 Florida Association of Counties Legislative Conference, attributed to Nick, in which the flight times did not correspond with the conference dates.
They identified two charges for attending the 2020 Florida Association of Counties Legislative Conference in which Glidewell provided dates of stay that didn't match up to the dates when the conference was held.
The investigators identified two charges from Glidewell for airline baggage that were incurred by someone who was not a county employee.
A transaction for a hotel room was identified in which no itemized receipt was submitted, the report said. A memo Glidewell provided for support of the charge states that the room was canceled and that the charge would be refunded.
"As of March 2, 2022, a refund has not been received," auditors said.
Glidewell said at Tuesday's meeting that he turned over "290 pages of stuff."
"Everything they (the Clerk's Office) said was missing was in their own system," he said.