Joliet debates need for forensic audit
By Bob Okon firstname.lastname@example.org November 8, 2011 6:30PM
Updated: December 10, 2011 9:47AM
JOLIET — Does the Joliet city budget need a forensic audit?
City council members discussed the matter at length this week. Some suggested holding a voter referendum on the question. The possibility of putting nearly 20 years worth of casino tax income under review was discussed, too.
The matter will be reviewed again Monday when an accountant specializing in forensic audits speaks to the council.
Finding out just what a forensic audit is and how much it could cost are a couple of the questions the council will ask.
Councilwoman Jan Quillman first suggested a forensic audit during her unsuccessful bid for mayor in April.
She raised the issue again last week after a Herald-News story on the newly released city budget reported that Joliet’s cash reserves had grown beyond what council members realized when they voted for tax increases in September.
Quillman said a forensic audit was needed to restore “public trust” in the city’s budgeting process and such an audit would not have to be a sign that council members suspected something was amiss.
“A forensic audit can also be used as a diagnostic tool,” she said at a Monday special council meeting on the budget. “It can be used as a positive thing.”
Councilman Larry Hug added that people often ask what happened to all the casino tax revenue generated since 1992, and that matter could be put to a forensic audit as well.
“The public doesn’t understand and doesn’t believe that it was spent wisely,” Hug said.
Getting satisfactory answers from a forensic audit could be very expensive.
City Manager Thomas Thanas said Sikich, an Aurora-based accounting firm that will make next week’s presentation, charges anywhere from $95 to $275 an hour in the course of a forensic audit.
J. Bradley Sargent, a forensic accountant in Mokena and chair emeritus of the American Board of Forensic Accounting, told The Herald-News that the cost of a forensic audit varies widely depending on its scope.
But the fees could be “astronomical,” he said, for a forensic audit examining an entire city budget or tracking 20 years of casino tax dollars.
Typically, Sargent said, the goals of a forensic audit are narrowed down before it begins. A forensic audit examines a financial situation in much more detail than the typical annual audit of city finances. Individual documents such as purchasing orders are investigated. It takes time and money.
“For someone to spend the money, there’s got to be some compelling evidence that something is wrong,” Sargent said.
Thanas has contended that the Herald-News article misrepresented the ongoing financial situation in the city. He points to an August mid-year report to the city council at a public meeting in which officials reported that the city would end 2011 with $9 million more in the bank than what was originally in the budget.
The Herald-News article, however, quoted council members saying they did not realize the full extent of the city’s cash reserves when voting on the tax increase in September. The proposed budget shows the city now expects to have $16.2 million more in the bank than it originally expected at the start of 2011.
Knowing it now does not seem to have made much difference in the council’s approach to budget cuts and taxes. While the council is divided over whether it needs a forensic audit, it is moving forward with budget cuts and showing no signs of reconsidering the divided 5-4 vote for a tax increase.
Thanas and other city budget-makers want to use the savings from 2011 to start next year with $25 million in a 60-day reserve fund. The rationale for that plan was laid out Monday, and no one on the council objected.
Mayor Thomas Giarrante opposes a forensic audit, saying it will only confirm the budget numbers the city already is working with.
“I just don’t see a reason for it,” he said.