"Real liberty is neither found in despotism or the extremes of democracy, but in moderate governments.
Alexander Hamilton

Monday, January 23, 2017

Bill Proposed to Allow County Convention to Authorize a Forensic Audit. Money to Come From Contingency?

NH House Bill 296  is scheduled for a public hearing tomorrow at 11am in the Municipal and County Government  Committee. This bill allows the county convention to authorize a forensic audit and pay for it from the contingency fund.
The sponsors, include numerous members of the Carroll County Delegation, including Glenn Cordelli who is continuing his feud with the Commissioners and Administration.

It's actually a bit comical in that the County has not had a contingency fund for a number of years, because ( and this is the comical part) the Delegation has not approved any contingency fund for the County budget. Zero. Last budget cycle, then Delegation Chair Karen Umberger told the Commissioner's that they did not need a contingency fund because nothing would happen over the coarse of the year.
So there is no contingency fund to draw from to pay for a forensic audit should the bill ever be passed. The cost of forensic audit is hundreds of thousands of dollars. Will the Delegation now approve $200K or so for a contingency fund, just to pay for a forensic audit that we do not need? The Delegation rejected the very reasonable and fiscally responsible plan proposed by the County at a cost of $20K  that would answer 12 key questions and would trigger a forensic audit if any wrongdoing was found.

The sponsors are either delusional or disingenuous or both.


Fred Van Magness said...

What is interesting is that the Annual Management Letters are not part of anything on line. Wonder why not ??? This is were substantive comments from the Audit Manager is found and can be very informative.

Joseph Cormier said...

Fred brings up some points worth mulling over!



Carroll County

Some history on the forensic audit. MoBo was well represented by citizens and BoS members. Yours truly was there as well, but did not hand out any Preparation-H. At least not at this meeting.


Present state law on audits:


Just a couple of County meetings that touched on audits:



William M Marsh said...

I have said from the beginning that I don't support a forensic audit at this time. And I have said I support the Commissioner's proposal.

On the other hand, having the authority to authorize a forensic audit if we felt there was sufficient evidence to justify the expense is probably appropriate, although I did not testify on HB 296.

Regarding management letters, my experience at the hospital is the management letter (if one) is given the the supervisory authority (the Trustees) by the auditors directly. To my knowledge, for the county there exist neither management letters nor any responses to management letters. However, I promise to ask any auditor reporting to me if there is a management letter -- in fact I did so today in my role as a Huggins Hospital Trustee.

Rep. William Marsh, Carroll 8

Joseph Cormier said...

"To my knowledge, for the county there exist neither management letters nor any responses to management letters."

Try page 4 of the following.


William M Marsh said...

Thank you Joseph.

In my experience with audits through the hospital, the management letter is a separate document given to the supervising agency (the Trustees) if they have uncovered specific concerns. If there are no issues, there is no management letter. Usually management prepares a response to this letter, and in my experience, the response is what steps they are taking to address specific concerns.

The document you refer to is the 2015 audit, not a management letter. Page 4 is the standard auditor boilerplate one usually reads in these documents. Having just been elected, I was not on the delegation in 2015. If there was a management letter in 2015, I would hope the concerns raised were addressed immediately, as my experience with management letters is that would be appropriate. I remain unaware of any management letter.

The one time we did have a limited forensic audit at the hospital, it had to deal with an issue which a standard audit would not have uncovered, and had nothing to do with management letters.

A full forensic audit is extremely expensive and is not something I would support in either setting without specific evidence of wrongdoing.

Joseph Cormier said...

You’re welcome William.

I recognize from the Huggins Hospital website that it is not a corporate entity, but a non-profit. I do not mean to cause debate on what a management letter is. The URL in my previous post, regarding management letters refers to public corporations, and knowing Fred, is what he was probably alluding to. I suspect that was the crux of the issue. I also recognize that Carroll County is not a public corporation. The county audit does state management position.

I have no background in non-profits, but my work career did include senior management position at companies like Wang Labs., attending Dr. Wang’s weekly design meetings, also plant manager of Wilcom Inc., ran manufacturing for LXE in Atlanta, and other work. All of my management work career was(now retired)in the corporate sector. I've mentioned many times, that my three degrees in business, including MBA, and having obtained paralegal certification from a NH state college around 20 years ago, entitles me to a Dunkin Donuts coffee ... maybe!

Seriously though, a forensic audit is not cheap, and is in pursuit of fraud. Whether that has happened at the County, I'm not to say. I'm not convinced that anyone else can either. Do I think it is worth pursuing ... probably not.

Some "stuff":

"Definition: A management representation letter is a form letter written by a company's external auditors, which is signed by senior company management. The letter attests to the accuracy of the financial statements that the company has submitted to the auditors for their analysis. The CEO and the most senior accounting person (such as the CFO) are usually required to sign the letter."


"The Public Company Accounting Oversight Board provides considerable detail regarding the content of a management representation letter in its AU Section 333."


You may or may not be familiar with FASB, but they also have statements regarding management letters.


Thank you for your service as a state rep., and doctor.
Maybe I'll see at the next county farm tour, as we both attended the last.

Fred Van Magness said...

The Management Letter I am referring to is a separate document that auditors present to management outlining areas of concern and opportunities for improvement. It is a common audit document and it is not the boiler plate stuff at the beginning of the audit reports. As an example, it may point out compliance concerns with current or future FASB rules. For full transparency, the County or the audit firm can clear up the issue by stating that there are zero SEPARATE audit management letters from the auditors to the County Commissioners in each of the audit years. It would be unusual to have everything perfect and without comment, but then again.........