COEUR d'ALENE - The city of Coeur d'Alene agreed Tuesday to contract the same accounting firm, Magnuson, McHugh and Company, to perform its annual financial statement audit as it has done for the city since 1999.
Whether the city takes a deeper look inside its finance department in light of the approximately $365,000 embezzlement uncovered this year will be decided after Feb. 5, 2013 - when the former employee who pleaded guilty to the crime is scheduled for sentencing.
In the meantime, the city council said, Magnuson, McHugh and Company remains a reputable firm capable of continuing to handle the city's statutorily required financial statement audit.
"That's real life in the outside world," Councilman Woody McEvers said, on the city implementing several safeguards since learning of the six-year theft in the summer. "You get stronger and you get smarter ... That's what growth and life is all about."
The contract is for $29,500, and includes a single audit as well as the financial statement audit. Single audits focus specifically on federal dollars given to a city when that total exceeds $500,000, which Coeur d'Alene surpassed. A financial statement audit samples and checks the reliability of financial statements.
What neither performs, however, is a forensic audit, which are audits launched when stealing is suspected and trace individual transactions all the way though as they probe for the suspected theft. Rarely do the audits cross paths, so if Coeur d'Alene wants another entity to dive into the embezzlement, they could contract out for that later.
That discussion could come back to the council early next year. The city, at advice of its legal department, wants to wait until litigation around the case wraps up.
Sheryl L. Carroll, 52, pleaded guilty to six counts of wire fraud stemming from the embezzlement and is scheduled for sentencing at the federal courthouse Feb. 5.
She faces up to 20 years in prison on each count.
After she is sentenced, the city plans to present a report on what happened, how, and what the department has implemented since then.
Since city staff discovered the financial irregularities, officials have implemented several safeguards, including ceasing most automated transactions, adding more employee oversight on wire transfers and banking security on check payments.
Besides exploring a forensic audit, which could cost up to $100,000, the city could kick around the idea of forming an independent steering committee, comprised of volunteers or experts, to look at the finance findings.
Councilman Dan Gookin was the lone vote against retaining Magnuson, McHugh and Company, saying he preferred to see if other firms would be willing to bid on the work. But other firms bid higher costs last year, and an early March deadline to have the work done looms, other council members said.
"There's another phase we can get to," Councilman Mike Kennedy said, about exploring more options after the new year. "This is not the end of the line for this topic."