Louisiana’s legislative auditor wants to require financial reviews of governmental entities to delve into credit card expenditures, travel expenses and other areas ripe for potential fraud and abuse.
Legislative Auditor Daryl Purpera said certified public accountants are hired to look at the accuracy of the entity’s financial statement. An audit in the CPA world is basically an opinion that assets and liabilities are fairly stated and that the financial statements are accurate within a certain acceptable standard.
But gaps exist between what the certified public accountants are required to do and what the public and legislators expect.
The public wants certified public accounting firms to “root out any fraud, waste and abuse,” Purpera said. “It’s a tougher look.
“They should be asking questions if they see something that gives them a concern. We believe they should look at things like credit cards, travel, whether or not they bid purchases that need to be bid, whether they have open meetings.”
State law gives Purpera the authority to set the scope and standards of the independent audits of local governments and nonprofit organizations that get state and federal funds. Purpera said he will work with CPAs that do government audits to come up with “what a better audit looks like in Louisiana’s future.”
Purpera pointed to a St. Tammany Parish pilot program as a potential model. The new audit rules — covering 94 governmental entities in the parish — came in the wake of a scandal that sent Coroner Peter Galvan to prison for, among other things, use of office funds for personal spending, including purchases of fuel and a GPS unit.
Audits, such as those for the East Baton Rouge Parish Clerk of Court’s Office operations, make Purpera’s point. The Clerk’s Office accounting firm gave its finances a clean bill of health but didn’t question $93,000 in credit card spending on food; lodging, including stays at casino hotels; and trips to home improvement and hardware stores and Cabela’s sporting goods.
The state inspector general is looking into the propriety of the spending, which came to light after an investigation by The Advocate.
Purpera’s office already probes deeper than a typical CPA firm when it audits state governmental entities.
“We are going to go look at those credit cards,” Purpera said. “Let’s say $1,500 is spent at Cabela’s. There’s no public purpose for it to you and me. To the taxpayer, that’s a material issue. Just because you have a receipt does not make it proper. You would have to go beyond the documents sometimes to see if it was proper or not.”
Harahan’s payment of $58,000 in health insurance premiums for council members is another example he cited.
“It’s not a lot of money: .08 percent of assets,” Purpera said. “What the public wants and what the legislators want is everything the CPAs give them now, but they want a little more. They want to know where money is misspent, even though it’s not material to the finances of the organization.”
The St. Tammany Parish model came about as a result of a 2014 law pushed by state Sen. A.G. Crowe, R-Pearl River, and state Rep. Tim Burns, R-Mandeville. Burns said the coroner’s scandal sparked a move for creation of a parish inspector general, which was going to be too expensive. So instead, having more in-depth audits ended up being the route taken, Burns said.
The law brought Purpera’s office into the parish to take a look at all governmental entities funded with taxpayer dollars.
“We reviewed audit reports, then sent questions to 94 entities asking for an idea of where the risk of misspending existed, then designed additional procedures,” Purpera said. “If they have credit cards, you have to look at the credit card expenditures. ... $1,500 may not be material to St. Tammany financially, but the fact that (Coroner) Galvan bought fuel for his boat is very important to the public.”
The additional work will cost the governmental entity more for audit services. But, Purpera said, the cost would be worth it.
Follow Marsha Shuler on Twitter @MarshaShulerCNB. For more coverage from the State Capitol, follow Louisiana politics at http://blogs.theadvocate.com/politicsblog/