January 21, 2005

County Council should not only authorize an independent risk assessment of county finances but also increase the size of its internal auditing staff, according to members of the audit committee.

The committee, which consists of five audit professionals from outside of county government who serve as volunteers, did not take a formal vote on those points, but made its position clear while discussing Council's finance committee's recent rejection of the risk assessment proposal.

While the issue would be categorized as routine internal 'housekeeping'  in normal circumstances, it is the latest installment in a running political wrangle over auditor Robert Hicks stemming from his relationship with the administration of former County Executive Tom Gordon.

Coincidently, the committee met as word was circulating in county government offices that Lynn Moroz, who handled loss management involving workers compensation for the county, had been charged by U.S. Attorney Colm Connolly with having willfully not filed federal income tax returns for five years. In his first audit report nearly a year ago, Hicks questioned the propriety of Moroz, a former county employee who then was working as an independent contractor, providing risk management services under a self-renewing contract. Hicks also questioned Moroz's business relationship with lawyer Michael Freebery, a brother of Sherry Freebery, then the county's chief administrative officer. County Executive Chris Coons reportedly fired Moroz, who was rehired as a county employee as Gordon's term was winding down, under provisions of the year's probation to which all new county employees are subject.

Since publishing the audit report, Hicks has been the focal point of a clash between Council members regarded as supportive of Gordon and Freebery and those who opposed the former administration.

Turning down a call for a vote on renewing a recommendation to undertake a risk assessment at the audit committee meeting on Jan. 20, chairman John Wheeler said, "They know how we feel. ... We did vote [previously] and I think the vote would be the same."

As the panel later considered the wording of a job description for Hicks's position, Wheeler said he personally thought Hicks's one-man audit department was insufficient for a government the size of New Castle County's. "They should have at least two [internal auditors] and they (the auditors) should not be doing non-auditing work," he said. Hicks also has been assigned some office-staff administrative responsibilities.

Committee member John Baxter, who had informally polled several county governments of comparable size around the nation, agreed.

During discussion of the risk assessment matter, it was agreed that the finance committee concluded by an eight-to-four margin that such a study was unnecessary in the absence of having been officially notified that the audit committee favored it. Ernst & Young, the firm which independently audited the county's books, recommended it.

Hicks acknowledged that he had not distributed minutes of the audit committee's December meeting, at which it voted unanimously to support the Ernst & Young recommendation. He said it is not normal practice to 'release' minutes of boards and committees before they are formally adopted at a subsequent session. The December minutes were approved at the Jan. 20 meeting.

Hicks pointed out, however, that he told the finance committee at its meeting about the audit committee's position. "I thought they would take me at my word as a professional on that," he said.

To ward off what he termed "a failure of communications" in the future, Wheeler, with the committee's concurrence, instructed Hicks to distribute drafts of minutes to Council members.

Talk about the minutes sparked an angry rejoiner from Council president Paul Clark who said he was "about to explode" over an arrangement Hicks had made to have a member of the staff of Wilmington government's internal auditing staff take minutes at the Jan. 20 meeting. It had been agreed at the finance committee meeting that Clark, to whom Hicks reports administratively, would arrange for necessary staff support.

"For some reason I'm being stymied along the way. ... I'm furious," Clark said. He then left the conference room. Returning later, he apologized to members of the audit committee saying, "You've been brought into a situation you don't deserve."

Councilman William Tansey was more direct in openly criticizing Hicks. "The auditor sits as the [conference] table, sets the [meeting] agenda and releases the minutes when he feels like it," Tansey said. Wheeler replied that it was appropriate for the auditor to participate in the meetings and that the agenda is issued after he (Wheeler) agrees what it should include.

Councilwoman Karen Venezky said she and the finance committee, which she chairs, opposed the risk assessment, which would cost $49,500, because Ernst & Young had "just completed a $150,000 audit" and given county finances a clean bill of health. Besides, she said, it was proposed to give the firm the assessment job without competitive bidding. It would be more appropriate, she said, to assess all risks that county government has and not just financial ones.

Calling a financial risk assessment "the next logical step" in establishing an effective internal auditing arrangement, Councilman Penrose Hollins said the assessment would look at future possibilities while an audit confirmed the accuracy of reports about what had happened in the past.

2005. All rights reserved.

Return to Delaforum Newsfront

Get more information about this topic

Read previous Delaforum article: Council questions why folks question state of county finances

What is your opinion about the topic of this article?
Click here to express your views.