Forensic audit: DA calls for state to audit city
District Attorney Allan Grubb, District 23, has officially called for an audit of Shawnee's finances.
On Monday afternoon The Shawnee News-Star received a copy of a letter addressed to Oklahoma State Auditor and Inspector Cindy Byrd, dated June 5, in which Grubb requested an investigative and forensic audit of the City of Shawnee.
“Over the past two years there have been constant allegations of missing or diverted funds from Municipal Bonds and sales tax dollars appropriated for a specific purpose,” Grubb's letter reads.
For the last couple years the city has been accused of misusing funds; Shawnee resident and former City Commissioner Tom Claybrook has repeatedly alleged the city took restricted monies — namely $7 million from the Streets Fund — and rerouted them to shore up deficiencies elsewhere.
The city has said as much — citing millions in street fund money were shifted to shore up negative balances in other areas.
The issue at its root is whether a city borrowing from itself — especially regarding restricted funds — is inappropriate.
“It's very clear in this (2018) audit that money was transferred around and there's a clear paper trail — which is legal — of all transfers, and auditors could follow it very simply,” Ward 3 Shawnee City Commissioner James Harrod said last July. “I don't know where the (alleged missing) $7 million comes from; I can't find $7 million in the budget, let alone $7 million missing.”
No laws were broken, Harrod said, if they had been, the city would have filed charges.
Claybrook said it explicitly states that when the voters approved the third-cent of sales tax (years ago) they did so in a manner dictating how it was to be spent.
Part of that sales tax — .4375 — to street improvements was legally restricted by the voters.
“There is no caveat allowing for those funds to be borrowed and sticking an IOU in the books,” he said to the board in March 2019.
Inquiries in March 2019 about the validity of the City's decision to move the funds were inconclusive:
• City Attorney Joe Vorndran, though he said he couldn't speak to the specific funds to which Claybrook refers, said the (general) shuffling of funds during day-to-day operations are within the authority of the municipality, and appear to be common practice.
“It happens all the time,” he said.
• Jim Denton, of Certified Public Accountants Arledge and Associates — the independent auditors who annually prepare a report on the city's financial activities and practices — chose not to weigh in on the matter when asked if an annual audit would be able reveal a misuse of restricted funds. The firm has given the City of Shawnee clean audits for the past several years.
• The Office of the State Auditor and Inspector could not offer clear certainties into the situation — at least not without digging much deeper.
Director of Public Information Trey Davis, Office of the State Auditor and Inspector, said he could not offer a clear answer without reviewing the ballot title authorizing the sales tax, the city's budget, financial statements, other financial records, meeting agendas or minutes, or interviewing its city manager and other city personnel, for more relevant information.
Generally speaking, he did cite Statute 68 O.S. § 2701 (B), which appears applicable in establishing certain safeguards to protect restricted funds:
“Money in the limited-purpose tax fund shall be expended only as accumulated and only for the purposes specifically described in the taxing ordinance as approved by the voters,” it reads.
That said, Davis also said, since the initial sales tax approved by voters is now permanent, he could not be certain if that has any impact on the ability of the city to use these funds for any purpose other than those purposes approved by voters.
“We would need to review the ballot title approving the collection and expenditure of these funds,” he said.
With legal and financial experts riding the fence — aside from Claybrook's hard no and the city's hard yes — Shawnee residents, have been left without a clear conclusion.
In March 2019 Davis said a Special Audit (also known as an investigative audit or forensic audit) could be requested through citizen petition if enough residents are concerned about misconduct.
The News-Star is unaware of whether such a petition was attempted.
Watch for updates.