Another audit approved in Fort Smith Animal Haven dispute

After discussing the issue for almost 90 minutes Tuesday night (Dec. 5), the Fort Smith Board of Directors agreed to spend up to $15,000 on an external auditor to resolve a $24,000 dispute with Fort Smith Animal Haven.

The board approved a resolution authorizing the mayor to execute an agreement with Chicago-based Baker Tilly US to review the Fort Smith Animal Haven Audit. The city’s internal audit of the Fort Smith Animal Haven was made public in June. The 200-plus page internal audit stated that the shelter has overcharged and inappropriately charged the city for services. The goal of the audit was to determine if the city was being correctly charged for animal services and evaluating if city protocols were being followed. The city contracts with Fort Smith Animal Haven to take care of lost or abandoned animals.

The audit originally stated that the shelter had overcharged the city $102,000. That number was reduced to $42,852 after the city’s internal auditor, Tracey Shockley, and representatives from Fort Smith Animal Haven met and reviewed listed inconsistencies, according to a November email to the Fort Smith Audit Committee referenced by Director and Vice Mayor Jarred Rego during discussion on the resolution at Tuesday’s regular board meeting.

Director Lavon Morton said Fort Smith Animal Haven has agreed to approximately $14,000 in inaccurate billing. The purpose of the audit is to determine what the actual billing inaccuracies are in order for the city to be properly reimbursed, Fort Smith Animal Haven’s integrity to be validated or errors calculated, Morton said.

The fee for the Baker Tilly is estimated to be between $10,000 and $15,000 and will be billed at a blended rate of $235 per hour, states a memo from Andrew Richards, the city’s chief financial officer.

At the Sept. 5 regular meeting for the Board to consider a resolution authorizing the Mayor to execute an agreement for third-party review of the Fort Smith Animal Haven audit. The item was tabled at the Sept. 19 meeting until the Department of Finance could identify an interested professional services firm qualified to provide such third-party review, Richards’ memo states.

“My goal was to bring a proposed service provider to the Board to consider that could perform the review with objectivity, independent of both the City and Fort Animal Haven, and not associated with either party in any capacity (such as the City’s external financial statement auditor),” the memo states.

Baker Tilly will work with the city and Fort Smith Animal Haven to plan, execute and report the results of the review by completing the following: Review the Audit Report, Audit Response, and executed contract between Fort Smith and Animal Haven.

During the lengthy discussion among directors, Director George Catsavis said he blamed the city mostly for not watching the expenses with Fort Smith Animal Haven more closely prior to the audit. He said if the city goes ahead with the audit, the city could be asked for independent audits in the future by anyone with a dispute of the city’s internal audit. He said the directors could accomplish the same thing as the auditing firm and “decide what’s owed and not owed and move forward.”

Catsavis, Director Christina Catsavis and Director Neal Martin all voted against the audit. Morton said the audit was necessary in order to put an end to the discussion and controversy regarding Fort Smith Animal Haven. He said while he wished the city could dispense with the audit and not spend the money, he believed it would take a completely independent audit to answer questions. Morton also said he believes Fort Smith Animal Haven should pay a percentage of the fee to Baker Tilly. That fee would be determined percentage wise on what Baker Tilly found was the actual reimbursement owed the city.

“If it’s $28,000, then they would pay 50% and the city would pay 50%,” Morton said, adding that he had spoken to Fort Smith Animal Haven and they had said they would be open to discussing whether they would contribute to the cost of the audit.

Director Kevin Settle said he was voting for the audit because there was no way to get to finality if there is no audit.The resolution passed with a vote of four to three with Rego, Settle, Morton and Good voting for the audit.