re: Abita Springs finance director under criminal investigation

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For most municipalities, $105,000 would not be material to the financial statements

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This is a Bugtussle town. The only traffic light is just out of town on the way out. This is $40 for every man, woman, and child in town, or $139 per household.

This is akin to having one week per year that you and your family cannot eat because some ditchpig stole your grocery money to buy dildos.

Scale changes perspective.

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This is $40 for every man, woman, and child in town, or $139 per household.

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Over a 2-3 year period. It's nothing.

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This is a Bugtussle town. The only traffic light is just out of town on the way out. This is $40 for every man, woman, and child in town, or $139 per household.

This is akin to having one week per year that you and your family cannot eat because some ditchpig stole your grocery money to buy dildos.

Scale changes perspective.

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Materiality in a financial statement audit =/= what a citizen may think is significant.

2022 financials show $1.5 million in General Fund revenues and $1.8 million in General Fund Expenses. Credit card transactions were more than likely reported in General Fund.

The reported $105,000 in credit card fraud was over 2 years, so for sake of argument, average monthly CC Statement was $4,375.

Audit materiality for significant items could have been somewhere around $5,000, for example, meaning a credit card payment below that amount wouldn't get a second look.

Audits would never get completed if every transactions had to get reviewed.

They were also limited to selecting one statement from only 5 credit cards. My small company has 4, I can only imagine how many credit cards a city would have

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Per the AUP Report, only 10 transactions (randomly selected) from a randomly selected monthly credit card statement were to be tested.

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I left audit a few years before the AUPs became a thing, so I completely forgot about them. But damn, that is such a small number of transactions that if you don't get lucky with which cc report you pull, it is very easy to miss some of these charges.

And, further to your point, when looking at the transactions on the cc statement, there is no way to know where those Amazon, WalMart, Sams...deliveries are going unless you happen to select the right transaction. This report will most likely make the LLA expand the AUP to pull more CC statements and transactions; also wouldn't be surprised if they had the entity's Amazon or Wal-Mart accounts as part of a separate AUP.

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I'm not arguing your statement but WTH?? When I think of "audit" I always assumed it was every transaction

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Would be nice to have all the time in the world with an unlimited budget to look through years of credit card statements like the investigative reporters to catch things like this, but audits are time and budget constrained.

Louisiana requiring those procedures has probably resulted in a lot more things coming to light than prior, but still requires some luck in sampling process to catch something like in Abita.

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Audits would never get completed if every transactions had to get reviewed.

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There's a wide range between every transaction and 10.

Percentage of randomized transactions would be a better way to go, with some sort of automated way to retrieve them.

This doesn't excuse the failures by the government - this was a failure all the way around.

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Percentage of randomized transactions would be a better way to go, with some sort of automated way to retrieve them.

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You're right, for sure, but what does the law require for this AUP? That's a legit question, I haven't worked on an audit of a municipality in Louisiana so I don't know.

It's possible the Town only wanted to pay for the minimum required under the law, and the audit firm isn't just going to eat the cost required to do more than they're getting paid to do.

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Unfortunately, reporters have led people to believe this is what happens in a typical audit. No matter how many times the profession reiterates what actually happens, and no matter how many times our audit letters say what actually happens, people don't read that stuff and just go with the common misconception from flashy headlines like this one.

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Doesn't help when the reporter bring on "an expert" that is a political analyst professor and he makes the implication that auditors review 100% of the transactions. If they were going to talk about the audit and not seek out someone that actually does auditing work, could they have at least brough in an accounting professor, let alone an audit professor.

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auditors only do a sample so even if they did select one of the questionable transactions she could easily cover it up with a fake invoice

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Well they pick the sample from the entire population. And this is a government, credit cards have additional procedures for governments.

They should be doing analytical reviews as well that could have caught this in various ways.

The real answer is governments don’t pay well for audits and require tons of additional procedures. The only way they are even financially feasible to do is keep staff busy in the summer because they have 6/30 year ends. The firm likely mailed it in.

From my understanding the statewide AUPs were designed to catch these transactions. The intent was to help detect fraud, waste, and abuse by forcing you to document the internal controls, and then analyzing the monthly statements based on the risk determined from the policies & procedures.

It will be interesting to see if they expand the minimum work the AUPs require. The minimum is currently fully tracing out 10 transactions per monthly statement, per credit card.