Sedgwick County will have new auditing firm

Sedgwick County commissioners unanimously approved a contract with a new auditing firm on Wednesday.

The firm, BKD, will also produce a separate report that examines the county’s internal financial policies and vulnerability to fraud.

“Recent events related to the theft of $566,000 from the taxpayers and the citizens of Sedgwick County indicate vulnerabilities that have not been identified in previous audits but may still exist,” County Manager Michael Scholes said Wednesday. “The status quo is simply not an option.”

The county lost $566,088.90 to fraudulent activity in October.

Scholes told members of the bid board last week that he wanted a “fresh perspective” with a new auditing firm.

“It was simply an act of transparency,” Scholes said of his presentation to the bid board.

Allen, Gibbs & Houlik is the county’s current auditor and had the lowest bid for the contract.

Paul Allen, AGH’s chief executive, told The Eagle on Monday that he believed the county was using the bid board process as a type of political payback against one of the firm’s partners. He said it was highly unusual for a county manager to tell bid board members what outcome he wanted.

Scholes said he did not talk to other county officials before recommending BKD to the bid board.

“My decision-making process for this action does not include political considerations or consequences,” Scholes said.

County Treasurer Linda Kizzire, who is on the bid board, said there was no collusion when Scholes spoke to the board last week.

“My decision for auditing services was my decision alone, and I believe it was the right thing to do,” Kizzire said. “It was time to maybe make a big change.”

Commissioners dismissed Allen’s statements and the idea that politics played a role in BKD’s selection.

“This commission and this county manager are absolutely committed to efficient, effective and accountable government,” Commissioner Richard Ranzau said. “That’s what you deserve. That’s what you expect. And that’s what you’re going to get.”

Commission Chairman Jim Howell called Allen’s statements a “fairly ugly accusation.”

“My opinion is that this is a business decision of what is best for the county,” Howell said.

Allen said late Wednesday his comments weren’t anything personal toward Scholes.

“We just disagree whether his bid board appearance was an instruction to employees or just providing a perspective,” he said.

Allen said Howell’s comments suggested his mind was made up on getting a new auditor. He said he wanted to express concerns about how much influence the commission and the county manager have prior to completion of the bid process.

Commissioner Dave Unruh said the county could have avoided most of the controversy by stating its desire for a new auditor in its original request for proposals.

“It is unusual, at least for this bid board, I believe, for the manager to address it and advocate for one (vendor),” Unruh added. “And I think that probably also precipitated in … some concern.

“I hope that this is an injury that can quickly and completely heal,” he said.

Ranzau said a county manager addressing a bid board was “somewhat out of the ordinary.”

“(But) we have to remember that being a victim of fraud to the tune of $566,000 is also out of the ordinary,” Ranzau said. “It requires us to take the necessary steps to be addressed appropriately.

“There are a lot of things that are going on behind the scenes that cannot be told at this point. But at some point, they will be told,” he said. “And then everyone will know the rest of the story and understand that we have a manager of extreme integrity who will get things done.”

This story was originally published December 14, 2016 at 2:45 PM with the headline "Sedgwick County will have new auditing firm."