Work on co-op audit near done
An independent audit of Socorro Electric Cooperative books is essentially complete and a report on the findings is expected within two weeks.
Richard Lopez, the co-op’s interim general manager, said two representatives with BKD LLC, an auditing firm out of Springfield, Mo., were in Socorro three days last week to review information and gather data.
“They believe they have all the information they need. If they need anything else, they’ll let us know and we can get it to them,” he said. “But I believe they have enough information to complete a report.”
The audit comes in the wake of an internal investigation into financial irregularities that eventually led to the firing of two co-op managers in August.
Lopez said BKD’s representatives arrived on Tuesday, Sept. 28. Assisted by four co-op staff members, the CPAs began work that afternoon and completed their work by Friday, Oct. 1. He said the auditor’s report should be ready in time for the next board of trustees meeting on Oct. 25.
At that same meeting, the 2009-10 audit conducted Bolinger, Segars, Gilbert & Moss of Lubbock, Texas, will be up for approval, Lopez said. That audit turned up numerous material weaknesses that needed to be corrected before it could be approved.
“We can proceed with the previous audit without affecting (the BKD) audit,” Lopez said.
The audit by Bolinger, Segars, Gilbert & Moss, completed in May for the fiscal year ending March 31, revealed material weaknesses with 18 accounts.
Randy Robbins, a partner with the firm, said at a special meeting in August that one of the big problems were “numerous” unreconciled accounts. He said at another meeting last month that some of the accounts hadn’t been reconciled in years.
Most of the amounts were relatively small, he said, but all of them needed to be “cleaned up” before the firm would sign off on an unqualified audit.
If the board approves the Bolinger, Segars, Gilbert & Moss audit, Lopez said it will then be made available to the public.
Co-op officials have turned down El Defensor Chieftain requests to view the audit.
What’s in a Name?
BKD was hired last month to conduct an audit of the co-op’s books from Jan. 1, 2008, to Aug. 31, 2010.
Though there has been much discussion over whether the firm would conduct a “forensic” audit or simply a “detailed” audit, the board agreed to a letter of engagement that paid the firm $38,000 for an audit that would include data mining of co-op computers.
Trustee Charlie Wagner — who is named as representative of the class of co-op member-owners in a proposed class-action lawsuit which names all current trustees, four former trustees and former co-op General Manager Polo Pineda Jr. as defendants — has insisted on a forensic audit.
Trustee Donald Wolberg has objected to use of the term “forensic” due to the negative connotations it conveys, preferring to call it a “detailed” audit.
Forensic audits produce data that is typically admissible in criminal court cases.
Phone calls placed to BKD’s Angela Morelock, a partner in the firm who submitted the initial proposal to Socorro Electric, seeking clarification on what this audit entails were not returned.
According to the proposal, BKD specializes in forensic accounting procedures and fraud investigation.
Among the duties it outlined in its proposal were to review:
• The co-op’s account loan transactions
• General ledger transactions in detail
• Expense reimbursement transactions
• Accounts payable transactions
• Credit card and similar charge accounts
Data mining, according to the proposal, looks for questionable relationships and transactions between accounts or anomalous payment patterns which could reveal undisclosed conflicts of interest and overpayment schemes.
During discussions of BKD’s audit, the trustees have left the door open should something be turned up that warrants further investigation of records.
Contact T.S. Last