Uncertainty, strife mar Bonner County audit

SANDPOINT — Bonner County accepted a battle-worn, no-opinion independent audit on Tuesday.

The audit found the county’s finances to be in generally good order, with the exception of $3.1 million in inter-fund loans used to pay for the construction of the juvenile detention center and the courthouse remodeling project.

The county’s bond counsel, prosecuting attorney and the Idaho Attorney General’s Office have said the loans appear to be illegal, although other Bonner County officials and other counties in Idaho contend they are legal.

“We don’t know the answer and I honestly don’t believe that the answer to that will be known until it’s tried in court,” said Mike DeCoria of DeCoria Maichel & Teague, the Spokane firm the county hired to conduct the audit.

The uncertainty surrounding the loans raised concerns that the independent auditor would be forced to issue a qualified opinion on the audit, which could have a chilling effect on future loans or drive up interest rates.

But DM-T said it was ultimately forced to issue an even less desirable no-opinion audit because Bonner County Clerk Marie Scott refused to sign her name as a management representative.

Scott has said she refused to sign the audit because she contends county Commissioner Mike Nielsen was overly involved with the audit process and placed undue influence on DM-T.

DeCoria said his firm had no choice but to make a no-opinion disclaimer.

“The clerk’s office is the one that maintains the general ledger,” said DeCoria. “When an individual will not accept responsibility for those books and records, that’s a scope limitation,” DeCoria said.

The ramifications of a no-opinion disclaimer on the audit are not entirely clear, although it could affect federal grant funding, bond ratings or lead to higher interest rates on loans.

DeCoria bizarrely lashed out at the media during a public meeting on Tuesday, incorrectly accusing it of downplaying the seriousness of the no-opinion disclaimer and taking issue with the reporting of allegations of undue influence by Nielsen.

However, those allegations were raised in the audit itself by Treasurer Cheryl Piehl, not by the media.

 DeCoria denied that Nielsen — or anyone else — improperly influenced the process. If there had been undue influence, the county would have gotten a more favorable opinion than the one it received.

Nielsen, who was appointed by the board to serve as the audit liaison, again denied that he exerted any influence over the audit or the people who were conducting it.

Nielsen said that Scott could have explicitly clarified her position on disputed matters within the audit and qualified her remarks by stating the representations in it were to the best of her knowledge and belief.

“One must ponder why any elected official, when given an opportunity to add their own exclusions and addendum, would refuse to certify these two statements in their management representation letter to the external auditor,” Nielsen said in a statement.

Piehl emphasized that the county’s accounting practices are sound, noting that it collected and disbursed more than $70 million in taxpayer funds.

“In the end, it isn’t about the clerk. It’s not about the treasurer and it’s not about the commissioners,” said Piehl. “It’s about the taxpayers and the safety of their money.”