Bonner County faces no-opinion disclaimer on audit
SANDPOINT — An independent audit of Bonner County’s finances could bear a dreaded no-opinion disclaimer.
The disclaimer could affect federal grant funding, scare off lenders or drive up interest rates on loans.
The disputed legality of inter-fund transfers to finance the construction of a new juvenile detention center and courthouse remodeling already threatened to result in a qualified opinion regarding the audit.
The $3.1 million in inter-fund transfers were seen as legal when they were conducted, although a growing body of legal research by state and county officials suggests the practice is illegal.
However, some continue to argue that the transfers are legal and they are routinely used by counties around the state.
The county hoped to avoid a qualified opinion by acknowledging and emphasizing the uncertainty surrounding the transfers. Now the county is faced with an even less desirable no-opinion disclaimer because county Clerk Marie Scott declines to sign off on representations in the audit.
“We were unable to obtain written representations from all members of management sufficient to comply with auditing standards,” reads a draft version of the management representation letter prepared by the external auditor, DeCoria Maichel & Teague.
Commission Chairman Cary Kelly said Scott’s refusal to sign the letter did not come as a surprise and the commission can’t force her to sign.
“She has told me on numerous occasions that under no circumstances is she going to sign off on the audit,” Kelly said during a meeting with DM-T on Friday.
Scott said on Wednesday that she declines to sign the representation letter because Commissioner Mike Nielsen and Scott Bauer, the commission’s civil counsel, interfered too much with the audit process. She also feels DM-T allowed the interference to influence aspects of the final audit and the client representation letter.
“I will not compromise my ethics and integrity by signing the client representation letter that could lend justification to what I personally view as a deficiency in theirs. If that results in a no-opinion audit, so be it,” said Scott.
Although Treasurer Cheryl Piehl signed her name to the letter, she filed an addendum sharing the concerns raised by Scott.
“Because of the strong difference of opinion between management, I feel it would be best to appoint a different Board member as liaison,” Piehl said in the addendum.
Nielsen admits that he has been more involved in the audit process than his predecessors, but disputes he exerted any undue influence on DM-T.
“It’s pure B.S.,” Nielsen said on Wednesday.