by Steve Smith

Orcas Island

This is an abbreviated column to fit within the allowed limits. The full article can be found at www.RecallWater.com.

The EWUA Board intends to hire a new auditor to do a “full audit of EWUA.”

On April 6, 2023, the EWUA Board hired Tiffany Couch of Acuity Forensics to review some of the General Manager’s transactions that looked questionable. Acuity was recommended by the Board attorney and selected by Jim Nelson. She was the only investigator considered of the four brought to the Board’s attention.

Who is Tiffany Couch of Acuity Forensics? See her CV here: https://recallwater.com/wp-content/uploads/2023/09/Tiffany-Couch-CV-2.pdf. Highlights of her CV are:

You can find Tiffany Couch’s YouTube channel at https://www.youtube.com/channel/UClHomQlMB0_IXPgDMp-PJ4g. It includes ten steps to take when fraud or misappropriation of funds is found. This Board has ignored these important steps.

In her book, she has a chapter on “Why auditors don’t find fraud.” As she notes, “An external auditor’s job is to determine whether the financial statements (usually the balance sheet, the income statement, and the statement of cash flows) are fairly represented and free from material misstatements…” [p. 114-115] She then notes statistics that show how fraud is usually detected. Internal audits detect fraud about 15% of the time, and external audits detect it about 3.5% of the time. A traditional financial statement audit is “simply not designed to find fraud.” [p. 119]

Acuity is very well qualified, had spent considerable time familiarizing themselves with EWUA operations and found problems, made recommendations, and had offered to investigate the areas that had raised additional questions.

Again, Acuity Forensics’ services were terminated, and EWUA intends to find a “reputable auditor” who will report if the financial statements are accurately stated. No continuation of investigations of potential fraud are desired by this Board.

If the EWUA hires someone other than Acuity Forensics to do the “audit,” then ask why they do not want a very well-qualified forensic investigator to continue their work. Acuity Forensics is a forensic investigator that was recommended by the EWUA Board’s own attorney and selected by the officers of the EWUA Board. This was an investigation paid for by the EWUA Board using Member money to determine if the General Manager had taken compensation unauthorized by the Board. The results of that investigation found:

“It is my professional opinion that the General Manager position at EWUA has too much financial control without proper oversight by the Board. This lack of oversight led to the likely overpayment of payroll to the current general manager and the potential overspending of EWUA funds.”

The forensic report also found many additional areas that warranted investigation as well as a failure of the EWUA Board to perform its oversight obligations properly. That is not a reason to terminate the investigator. That is not a reason to start over with someone new, someone who does not specialize in forensic investigations.

Link to Acuity Forensics’ Report: https://recallwater.com/wp-content/uploads/2023/08/ForensicReport.pdf.