December 30, 2012

That Horse Has Left the Barn

Filed under: Probable Cause — Bill @ 9:09 am

empty barnToday our local skewspaper, the Coeur d’Alene Presseditorially suggested that the City of Coeur d’Alene should get a forensic audit done in order to restore the public’s confidence in the City’s ability to handle its finances.

Now Coeur d’Alene Press Publisher Jim Thompson and Editor Mike Patrick want the City to pay more money to hire a forensic accountant to come in and develop evidence that can be used in court against a person who has already agreed to plead guilty.

The horse named “Forensic Audit” has already left the barn insofar as the case against Sheryl Carroll is concerned.

Forensic audits are accounting processes used by specially-trained accountants to find and preserve evidence that will be admissible in court.  What the Press editorial board ought to have recommended instead is a financial risk analysis to identify all the financial risks facing the City and to suggest appropriate preventive and corrective countermeasures.  The fact is, a competent City Finance Director would already have done exactly that — shortly after being hired.

The American Institute of CPAs (AICPA) website has a fairly good overview titled Fraud Prevention.  Although this applies particularly to private corporations, the principles can be used to guide municipalities as well — at least those municipalities that are genuinely interested in retaining or restoring the public’s confidence.

But things have badly deteriorated in Coeur d’Alene, Idaho.  The first step to restoring the public’s confidence in the City’s ability to be good stewards of the public treasury is to replace Mayor Sandi Bloem, Council President Mike Kennedy, Councilman Deanna Goodlander, Councilman Woody McEvers,  City Administrator Wendy Gabriel, City Finance Director Troy Tymesen, and City Attorney Mike Gridley.

Then the new Mayor, City Council, City Administrator, and Finance Director need to adopt and follow rigorous practices for soliciting and awarding public works and professional services contracts.    The primary objective of these contracts must be to secure the best value for the City’s money.   Thus, even if the dollar amounts of the contract would justify sole-sourcing it, the City must consider seeking competitive quotes and bids.  The City should also make it very clear to those being solicited that engaging in any of the practices amounting to bid-rigging will result in disqualification from consideration.  Likewise, any City employee or official tolerating or engaging in bid-rigging should be fired and prosecuted.  In other words, a new City administration should make it very clear to all, certainly including the public, that the business-as-usual practices for awarding public works and professional services contracts in Coeur d’Alene have ended.

Likewise, the City government must make it crystal clear that it will not participate in questionable although legal practices such as using foundations to launder money and circumvent the will of the people providing the money.  Nor will the City publicly or privately support organizations which engage in that practice.

Today’s Press editorial is several years late and at least $365,000 short.  A costly forensic audit at this point would not be prophylactic.  A competent, well-conceived risk analysis would, but only if commissioned by City officials who are genuinely interested in protecting the public from incompetence and corruption.

Now that the horse has left the barn, Coeur d’Alene needs to shovel out the stalls before bringing in new horses.




  1. A “forensic audit” is a code phrase used by lazy or clueless folks who do not have a lot of experience with either government or accounting. A full scale “management review” or “management audit” very much like what Dick Harris did a dozen or more years ago for the Post Falls schools would be a much better idea. Harris pulled in experts from out of state who had no ties to the local folks, got a detailed report of the problems (and they were many) and then crafted a multi-year cleanup. It worked.

    Comment by Pariah — December 30, 2012 @ 9:15 am

  2. If they want to restore faith they would fire those that did not do their job. End of story.

    Comment by concerned citizen — December 30, 2012 @ 9:52 am

  3. Pariah,

    The forensic audit has a very limited and specific purpose: To develop evidence that will be admissible in court. It is reactive and not intended to be a preventive proactive measure.

    I’m not sure that our (alleged) Kootenai County Prosecuting Attorney Barry McHugh would not be conflicted out of prosecuting any City employees and other City officials who participated in the process to give McHugh’s wife a contract for $100,000 for a piece of public art that welcomes visitors to the east end of Dogpatch.

    And our US Attorney for the District of Idaho seems to have little interest in what goes on anywhere except the Treasure Valley. There are 25 Assistant US Attorneys in Idaho. Of those 25 AUSAs, 3 are in Pocatello to cover 18 counties and 3 are in Coeur d’Alene to cover 10 counties. The remaining 19 are in Boise to make sure US Attorney Wendy Jo Olson looks good to the movers and shakers in the Treasure Valley and her bosses at Main Justice. With so few AUSAs up here, I don’t look for any federal waves to be made.

    Comment by Bill — December 30, 2012 @ 10:00 am

  4. This is an issue of leadership, or a lack thereof. The next Mayor needs to come into office with a pledge to follow the example that took Post Falls schools from a D minus to a C plus in three years. It takes time to clean up after this type of neglect. The people of Coeur d’Alene now know that they have liars in office. They are hungry for new leadership.

    Comment by Pariah — December 30, 2012 @ 10:27 am

  5. Pariah,

    I hope you’re right about the citizens wanting new leadership. Apathy and misplaced trust is what got the present cast of characters their roles.

    Comment by Bill — December 30, 2012 @ 11:08 am

  6. The Press article states that the city released or shared the information with them – but who shared it? Who caught it? What was the red flag? None of that information is revealed. I suspect that the Press has more information and this article is one of many that will be fed to us to ensure us that the city is doing everything they can to fix this mess, while they take some sort of pat on the back for good old investigative reporting while they spoon feed it to us in soundbites with ridiculous excuses – saying that personnel rules prohibited such a thing. Embezzlement is a crime and she was charged – still no mug shot.

    Why did the “city” tip off the Press so early without the pertinent information? Did Wendy Gabriel once again decide to orchestrate another production on her own? We all know she likes to feed info to the Press and keep city council members out of the loop.

    “As information became available, the city shared it with The Press, which immediately shared it with the public.”

    … and now the city refuses to cough up the rest of the story and they admit they know more information – until after the sentencing? Something is clearly wrong.

    Comment by Stebbijo — December 30, 2012 @ 1:09 pm

  7. Bill:

    1. I think there is a family relationship between Kootenai County Prosecuting Attorney Barry McHugh and John McHugh of Magnuson, McHugh and Co. the City’s auditors.

    2. The city may still contract with Magnuson, McHugh and Co. for their Section 125 Cafeteria Plans of benefits (pre-paid medical)

    3. An employee of Magnuson, McHugh and Co. met and married a city employee who worked side by side with the new City Clerk and current City Administrator. The former city employee’s family is known for their political donations.

    More reasons why our community needs to clean house.

    Comment by LTR — December 30, 2012 @ 7:10 pm

  8. In regard to the “award” of city contracts – ever wonder why the same firms always get hired? From engineering, to landscape design, from conceptual, to moving dirt, to paving, and the porta potties that travel along – even a cursory review of the trend(s)over the last 5 years would reveal all the same folk are “hired” over and over again – despite not always being the lowest bidder.

    I have hired all of the firms that are working on the park at some time in my career. They were never the least expensive. Their pitch was that they were “connected.” In hindsight, still don’t really know what that meant, but I hired them anyway and paid dearly for their supposed inner-workings of the City.

    Next will come all of the City’s required technical “corrections” to the various team members components of work. These too will cost and of course be not the fault of the brain-team, but required because their initial plan did not meet this or that code requirement.

    After all of the corrections are noted (to which will add to the cost)next to anounce retirement will be City Engineering Director Dobler, next will be Bates. The rats are jumping ship – but only after they pad their lifeboat.

    Game afoot.

    Comment by old dog — January 3, 2013 @ 12:22 am

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