Sedgwick County wants auditor to look at its vulnerability to financial fraud

Sedgwick County wants an external auditor to identify ways its finance department is vulnerable to fraud.

The county changed what it wants from its auditing services less than a week after the fraudulent loss of more than $566,000 was discovered by financial staff. An investigation by the Sheriff’s Office and FBI is ongoing.

An addendum to the county’s request for proposal for auditing services said “a key segment to our scope of services was inadvertently left out of our original request.”

“The auditor shall annually conduct a detailed evaluation and review of the entirety of Sedgwick County’s internal financial policies, processes and procedures,” according to the addendum published Oct. 31.

Sedgwick County public information officer Kate Flavin wrote in an e-mail that the change was added to “ensure that the county received a comprehensive financial audit.”

County financial staff discovered fraudulent activity costing the county $566,088.90 on Oct. 25. Records obtained by The Eagle showed an electronic payment for a road project did not go to Wichita construction company Cornejo & Sons, which was contracted for the work.

Flavin would not say if the change was related to that incident.

According to the addendum, a separate “policies and procedures” audit would:

▪ Identify where the county would be “vulnerable to internal or external fraud and/or abuse.”

▪ Evaluate the integrity and reliability of the county’s financial procedures.

▪ Evaluate if those procedures were adequate and effective compared to the best practices and what similar organizations do.

▪ Identify potential risks or weaknesses with the county’s internal financial policies.

▪ Identify suggestions for improvement.

The report would focus on the county’s finance department, the department affected by the fraud.

The separate audit would begin at the same time as the overall audit and would go to County Manager Michael Scholes.

Local governments like Sedgwick County routinely publish requests for proposals, or RFPs, to get goods and services, ranging from road work to squad cars for sheriff’s deputies.

Businesses in the private sector respond to RFPs with bids to do the work requested by the government.

In this case, Sedgwick County issued its request for auditing services on July 15. It was sent to 24 vendors.

Eleven vendors responded to the request by Aug. 23. Only those 11 can respond to the updated request.

Plans regarding the “policies and procedures” audit were submitted on or before Nov. 14.

Sedgwick County is now studying those bids. Flavin said county commissioners will vote on a contract Dec. 14.

The winning bidder will audit financial statements from the county’s 2016, 2017 and 2018 fiscal years. The county can choose to extend the contract two more years.

This story was originally published December 3, 2016 at 5:49 PM with the headline "Sedgwick County wants auditor to look at its vulnerability to financial fraud."