The Bang Fraud and Internal Controls

The Bang Fraud and Internal Controls

Will the County Council learn from the $6.7 million fraud perpetrated on the taxpayers of the county?  We will find out when its Audit Committee members meet on March 14th.  Will the Council expand the scope of the current Clifton audit contract to include testing and rendering of an opinion on internal controls – the very vulnerability that caused the Bang fraud to flourish unchecked?

The last page of the auditor’s CAFR opinion letter for the FY’18 audit, makes it clear that their current testing is “not to provide an opinion on internal control over financial reporting…”  So no one is testing the controls set by the Department of Finance (the overseer of all things financial in the county government) because the County’s external auditors do not test these same internal controls to render an opinion.

In the wake of the Enron fiasco – and yes, we are not there yet – every publicly traded commercial organization now engages their outside auditors to provide an opinion on internal controls.  This in turn stimulates more robust internal assessments of controls by managers who own the controls called self-assessments.

MCPS and WSSC audits have the same deficiency.  The County needs to lead on this issue.  If not, the Bang fraud could lead to a bigger bang in the future.

There are other questions for which there are no answers:  Why did the background check of Bang, run by the County, not reveal his 2006 bankruptcy?  While Bang worked at the Department of Finance, what were his duties and fiscal responsibilities?  Has the county investigated any possible kickbacks on grants and contracts as a result of lax controls exhibited in the Bang case?  Why did the County and the Inspector General withhold vital public information until after the election and the Amazon decision?

Let not history repeat itself.

Joan Fidler and Gordie Brenne, President and Treasurer, Montgomery County Taxpayers league

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