Image: The Montgomery County Auditor’s Office is a mess.
Conroe, August 13 – An independent External Quality Assessment (EQA) of the Montgomery County Auditor’s Office (MCAO) determined that Montgomery County Auditor Phyllis Martin only “partially conforms” to quality standards for internal government audits and that there are several areas of accounting practice where Martin “does not conform.” The independent accounting firm of Postlethwaite & Nettleville conducted the EQA under a commission from the Board of District Judges with 410th District Judge Jennifer Robin as Chief Administrative Judge.
Temika Jones, an Associate Director of Postlethwaite & Netterville, led the EQA team of accounting professionals. Jones and her team interview and surveyed more than 40 County employees and conducted extensive interviews with and analyses of Martin and her staff.
The EQA concluded that “The MCAO (including the Internal Audit Division)…does not perform audits of the County’s financial statements. If the MCAO did perform audits of the County’s financial statements, compliance with the Generally Accepted Government Auditing Standards (also known as ‘Yellow Book’) would be required.” The problem, however, is that the County’s outside auditors, Weaver & Tidwell, do not perform a full external financial audit either. Essentially, Montgomery County’s government, with approximately half a billion dollars per year of expenditures, has no financial audit in accordance with Yellow Book/Generally Accepted Government Auditing Standards.
The bottom line of the EQA was that MCAO “partially conforms to the” Institute of Internal Auditors (IIA) Standards for the Professional Practice of Internal Auditing. The EQA found nine (9) major areas where Martin and her team failed to conform, even partially, to the IIA Standards.
Another disturbing aspect of the EQA’s written report was Postlethwaite & Netterville’s finding that of the 25 staff members in Martin’s $2.2 million per year County Auditor’s Office, there are only four (4) full-time employees that are responsible for executing the annual audit plan as developed by the County Auditor and the Supervisor of Internal Audit.
In its survey of County Auditor’s Offices, the Citizens Budget Committee found that nine of the ten largest counties in Texas by population have Certified Public Accountants as their County Auditors while the tenth, Collin County, as at least four (4) CPAs on staff at all times. Montgomery County, the eleventh largest county in Texas by population, is the largest County in Texas without any CPAs on the staff of the County Auditor’s Office. Phyllis Martin is not a CPA.
After applying the EQA methodology required under the IIA’s Professional Practices Framework, the EQA found that Martin’s Office does not conform to IIA Standards in the following areas:
- Quality Assurance and Improvement Program;
- Specific requirements of the Quality Assurance and Improvement Program;
- Internal Assessments;
- External Assessments;
- Reporting on the Quality Assurance and Improvement Program;
- Disclosure of Nonconformance;
- Communication and Approval; and
- Reporting to senior management and the Board of District Judges.
The EQA reported that the Montgomery County Auditor only “partially conforms” to IIA Standards in these areas:
- Direct interaction with the Board of District Judges;
- Roles of the Chief Audit Executive beyond internal auditing;
- Impairment to Independence and Objectivity;
- Due Professional Care;
- Managing the Internal Audit Activity;
- Risk Management;
- Documenting Information; and
- Monitoring Progress.
In the secretive, anti-citizen culture that Martin, County Judge Craig Doyal, and County Commissioners James Noack, Charlie Riley, and Mike Meador have established, the failure of the Montgomery County Auditor to “generally conform” to IIA Standards is not surprising.
The EQA Report should alarm every citizen of Montgomery County who cares about the future of this community.