City auditor warns forensic audit requires evidence of fraud; council to revisit at Committee of the Whole

Interim City Manager Kimberly Hines introduced Cynthia Scott of Stephenson & Company, P.C., who described the differences between forensic accounting audits and other audit types and cautioned the council about legal risk and evidentiary standards.

"To do a forensic accounting audit you need to have predication of fraud," Scott said, adding that expanded audits or internal-control audits could be alternatives handled by the city’s regular auditors. She advised the council to consult the city attorney about whether certain discussions should be held in closed session and warned against public statements that could be defamatory.

Council Member Sischo said the council must also be careful about information coming forward; Mayor Sarah Kile reminded the meeting that whistleblower protections exist. The council reached a consensus to gather facts and present them at the next Committee of the Whole meeting for further consideration.

Scott did not provide a cost estimate for a forensic audit, saying costs depend on the depth of investigation requested. The presentation noted that an expanded audit could be done through the city’s existing auditors while a forensic audit typically requires a demonstrable basis for suspicion before a costly, targeted investigation would be justified.

The council took no formal action at the meeting; the item will be revisited at the committee meeting where members expect to review any factual allegations and legal guidance before deciding whether to pursue an investigative audit.