Area counties fight demand to redo audits

by April Scheinoha

    Pennington County and other affected counties are drawing a line in the sand when it comes to their 2015 county audits and State Auditor Rebecca Otto.
    “It’s time we draw a line in the sand with these people,” said Pennington County Commissioner Neil Peterson.
    Roseau County is submitting a letter to Otto, seeking a meeting with her regarding its 2015 county audit. The county has sought the support of seven other counties in a similar situation.
    At its meeting Tuesday, Sept. 12, the Pennington County Board formally provided its support. Commissioners also rejected Otto’s attempts to perform Pennington County’s 2016 audit.
    The State Auditor’s Office has determined that Hoffman, Philipp & Knutson PLLC didn’t provide enough research to reach the conclusions listed in its findings for eight county audits conducted by the firm. Cody Hempel, Pennington County Board chairperson, noted that the State Auditor’s Office had issues with the reporting mechanism, not the numbers listed in the Pennington County audit.
    Besides Roseau and Pennington counties, affected counties include Clearwater, Hubbard, Kittson, Koochiching, Lake of the Woods and Red Lake.
    The State Auditor’s Office wants to conduct a new 2015 county audit for all of the affected counties. Pennington County Auditor/Treasurer Ken Olson said it plans to send eight teams of auditors to complete the audits in mid-October. He believed a team of four auditors will work on the Pennington County audit for about a week. Affected counties were also told to provide additional and supplemental documentation by Friday, Sept. 22.
    In the letter, Roseau County indicated that the new audits will cost the counties thousands of dollars. It further noted that the State Auditor’s Office is unfairly impacting the financial reputations of the affected counties.
    Colleen Hoffman spoke about the issue during a Sept. 5 meeting of the Thief River Falls City Council. She said the firm has passed all reviews by the State Auditor’s Office over the past 13 years. Hoffman was formerly employed by the State Auditor’s Office now led by Otto, a gubernatorial candidate.
    By state statute, the county can hire a private firm to conduct its annual audit. Five other private firms are in the same situation as Hoffman’s firm. Otto is appealing a lower court decision to the Minnesota Supreme Court, trying to overrule a state law allowing counties to hire private firms to conduct county audits. In the past, the State Auditor’s Office conducted such audits.
    Hoffman, Philipp & Knutson is currently working on the 2016 Pennington County audit. The contract calls for the firm to be paid $23,500. Earlier this year, commissioners approved another five-year agreement with the firm at a cost of $24,000 per year for the 2017 to 2021 audits.
    The State Auditor’s Office has sent a letter of engagement to Pennington County regarding the 2015 county audit. “They still plan on doing ’15 and ’16,” Olson said.
    Pennington County Commissioner Darryl Tveitbakk questioned why the State Auditor’s Office needed to redo the county audit instead of letting the firm make the corrections. Along with other commissioners, he wondered aloud why the 2016 county audit is substandard when it hasn’t yet been completed and the firm would more than likely correct any issues that would also affect that audit.