More Tales of Retaliation Against Audit & Compliance

Alas, it’s time for more tales of retaliation against compliance and audit professionals. Several have streaked across my radar screen lately and we should always take note of them, since commitment to doing the right thing deserves praise and organizations trying to squelch speaking up should be called out.

We begin with the Dallas Independent School District, where the chief auditor is suddenly under performance review after flagging potentially millions overpaid in school construction projects. 

The auditor, Steven Martin, was hired in 2019. He soon published two audits of school construction projects where he found potentially $300,000 overpaid on contracts worth $1.2 million. One of those audits called for the school district to refer the matter to the Dallas district attorney for criminal investigation.

(UPDATE: Per latest news reports on Thursday, Martin has resigned.)

According to WFAA, a prominent TV station in Dallas, Martin is also reviewing another nine contracts with potential overpayments of $1.7 million; and suspects that maintenance department employees might have engaged in systematic bid-rigging fraud for years, with potentially $67 million in overpayments spread across hundreds of contracts. 

The maintenance department under scrutiny has been disbanded, school district officials say, and “many of the individuals cited in the audits no longer are employed by the district.” The district has also made multiple referrals to law enforcement. 

So a new audit executive arrives, discovers probable misconduct, law enforcement swoops in. So far, so good, right? 

Wrong! First, in January the audit committee of the school district proposed a measure where any fraud under $250,000 would not go to Martin’s office for review; instead, those smaller frauds would go to the district’s Office of Professional Standards. Then the audit committee sprung a job performance review on Martin, and a peer review for his staff, two years ahead of schedule.

That led to an extraordinary moment Tuesday night, when Martin appeared in front of a school board meeting and defended himself during the meeting’s standard public comment period. His words:

“Why is the audit committee and management both bringing in third parties to review our audit reports at this time? And why did the administration try to change policy preventing internal audit from investigating vendors?… Internal audit has been highly effective. However, we cannot continue to be without your support. Calling for a peer review two years early demonstrates management and the district’s vendors a lack of confidence in internal audit.”

You can even see Martin addressing the school district below. Gotta love public-access television.

I did my fair share of local government reporting in my younger days, and never did I see an employee show up to a public meeting and call out his bosses like that. Maybe the school district’s audit committee does have some legitimate grievance against Martin’s work, but the optics look terrible. Here’s hoping the Dallas school district does better by him.

Meanwhile, in Washington

Next is the case of Elaine McCusker, acting comptroller and CFO for the Defense Department. McCusker had been nominated by President Trump to be permanent comptroller and CFO — until she resisted Trump’s demand last summer to withhold congressionally approved military aid to the Ukraine.

Emails between McCusker and various Trump Administration officials, where she expressed concern that stalling on the $250 million in aid might violate the Impoundment Control Act, reached the media in January. Then Senate Republicans acquited Trump in his impeachment trial on Feb. 4. 

Well, you can guess what happened to McCusker’s career prospects after that. According to the New York Post, the White House now plans to withdraw McCusker’s nomination as permanent comptroller and CFO. We don’t yet know whether McCusker would then continue her career at the Pentagon, but let’s not kid ourselves. We all know McCusker’s government career is now in ruins. 

For the record, the Government Accountability Office later published a report saying the Trump Administration did indeed violate the Impoundment Control Act by withholding the Ukraine aid. So McCusker was reasonable in her judgment all along. Sigh.

In other impeachment retaliation news, Rep. Devin Nunes, R-Calif., has threatened to refer Intelligence Community inspector general Michael Atkinson to the Justice Department for criminal investigation for how Atkinson handled the Ukraine whistleblower’s complaint. 

Trump has also considered firing Atkinson for several months, and that rumor has been percolating again lately given all the other ousters the president has been doling out to witnesses who testified about his conduct during the impeachment trial. 

I salute the ethical commitment of those witnesses too, but I try to focus on retaliation against audit and compliance professionals here. Numerous times over the last year I flagged stories of retaliation against the profession in the corporate realm; today it’s the government sector’s turn.

As always, if you have other tales of retaliation you want to share, email me at [email protected]. Anonymity offered upon request. 

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