Stockbridge Criminal Financial Irregularities 'Unfounded'

By Jason A. Smith (114)

A “forensic” audit into financial matters in the City of Stockbridge, have provided nothing to warrant criminal actions, according to the findings of a firm hired to investigate alleged irregularities.

Forensic audits are routinely used to examine the economic affairs of a person or group, and results in a report can be used in a court of law.

The firm, GlassRatner Advisory & Capital Group LLC, of Atlanta, conducted the audit, and announced findings during a recent work session of the Stockbridge City Council. The findings showed that claims of impropriety by city officials were without merit.

Mayor Lee Stuart said the audit stemmed from a management-training exercise conducted in Stockbridge during May and June. He said the exercise revealed potential “financial irregularities,” but declined to elaborate on those irregularities.

“A report was given to the city administrator on that,” said Stuart, in September. “I received additional, confidential information addressed to me. When I received that confidential information, I sought advice from higher state authorities on what to do.”

City Administrator Ray Gibson confirmed that the alleged need for an audit was initiated by Bruce Sutton, who oversaw the training exercise. Stuart said he consulted the Georgia Bureau of Investigation (GBI), and the Henry County District Attorney’s Office, to determine his next step.

The Atlanta-based GlassRatner firm was asked to identify financial irregularities, if any, which were the focus of a letter from management consultant, Bruce Sutton, to Mayor Stuart, said Gibson.

Sutton, a certified fraud examiner from New Zealand, was under contract to Stockbridge until late May, according to the report. He was let go after it was learned he had a key to City Hall.

“Mr. Sutton, once his contract was terminated, provided the mayor and I with a management report for half of the city departments,” said Gibson. “Mr. Sutton also provided the mayor with a second report, that I, nor the rest of the City Council received, and it outlined certain financial irregularities deemed sufficient for investigation.”

The GBI subsequently recommended a forensic audit.

Sutton alleged that vendors for the city did not receive proper tax forms for payments issued from 2007 to 2010, and certain vendor payments were not sufficiently documented ... were improperly paid.

Sutton’s claims of impropriety were largely “unfounded,” accountants, Ian Ratner and Sam Hewitt, of the GlassRatner firm, wrote in their report, dated Oct. 26.

“Our investigation, in general, refutes Sutton’s assertions,” Ratner and Hewitt wrote. “Sutton’s work appeared very casual, resulted from an incomplete assignment, and was not supported by a detailed and comprehensive forensic investigation.”

The forensic audit, however, also states that two former employees — City Clerk, Merle Manders, and Treasurer, Nancy Brown — received a total of $5,770.95, in unauthorized pay increases, according to payroll records from 2009-2010.

However, the report notes that the city had a practice of 5 percent pay increases, automatically each year, until there was a freeze in January of this year. Technically, the approvals were interpreted as granted, by the language of a resolution approved by the city council.

“The forensic audit findings from GlassRatner conclude, other than the potential issue of certain unauthorized payroll increases, the assertions in the Sutton report proved unfounded,” Ratner and Hewitt agreed in their report.

“The report also points out that Mr. Sutton has never been qualified to perform financial audits in the U.S.A., may not have ever worked on a financial statement audit while in the U.S.A., and has never held a professional designation equivalent to a CPA,” said Gibson.

Gibson hired Sutton, in May, as a management consultant to train city staffers in fiscal policy and management responsibilities.

“Internally, our staff is working diligently to not only improve upon the financial controls here at the city, but also to improve in many other areas of service delivery,” said Gibson.