The City of Seward is soliciting bids for a three-tier forensic accounting audit of all utility customer bills for November and December of 2018 and February and March of 2019 through a request for proposals (RFP). Council members Ristine Casagranda and Liz DeMoss have championed the need for an audit since before their current council terms when they discovered irregularities in their own utility bills and those of friends and family.
“We identified several errors on my personal bill that equaled almost $7,000 over the last two years,” DeMoss said. “We spoke with the utility counter, the finance department, and they admitted to the incorrect billing and offered us a credit on our account, and in that time, Council Member Casagranda and myself identified several other friends’ and family members’ utility bills that had errors on them as well.”
Among the irregularities discovered were improper billing of water lines, erroneous additional rate charges, and double charging based on both usage and Equivalent Residential Units. DeMoss and Casagranda, both agents with Coastal Heritage Properties, also discovered errors in clients’ utility bills.
“We don’t know if it’s a software glitch, if it’s a personnel issue – if it’s a current personnel issue or a previous personnel issue – but we have had our constituents ask us to find out why this happened, and so we are preparing to do so,” DeMoss said.
The Council initially discussed conducting an audit of every bill for every utility customer spanning a three-year period. Consulting accountant Grant Todd of Altman, Rogers & Co. estimated the cost of such an audit at $1,084,875. The Council then decided to limit the audit’s scope to two months in 2018 and two in 2019.
“We want a hundred percent of the bills for the time period we picked,” DeMoss said. “We wanted to pick months that we knew for sure there were errors so the auditor would be able to see those errors and have a trail to start with.”
The audit comes at a time when Seward is undergoing several administrative changes. Seward Electric Utility Manager Rob Montgomery assumed his role this year; Harbormaster Norm Regis has stepped in as acting city manager since the dismissal of Scott Meszaros last autumn, and Jennifer Pae will be assuming the long-vacant role of finance manager in March. Though the billing irregularities predate the terms of the current administration and are no longer ongoing, the financial scope of the errors and number of customers affected appears to be significant.
“I’ve been hearing of constituents wanting a forensic audit on the finance department here in Seward for a long time,” DeMoss said, “so I think that there personally have been some ongoing issues for a while, and I just think that once and for all we need to identify what those issues are and get it taken care of.”
The RFP is open to all Alaska accounting firms with certifications in either financial forensics or fraud examination. Bids are due at the clerk’s office by 1 p.m. on March 12.