Audits vs Investigations

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 (downloads as a PDF). Highlights of her CV are:

  • Professional Designations and Affiliations
  • Certified Public Accountant
  • Certified in Financial Forensics
  • Certified Fraud Examiner
  • Washington State Society of CPAs (WSCPA)
  • WSCPA Southwest Chapter Board of Directors, 2006-2012
  • Member of the Association of Certified Fraud Examiners (ACFE)
  • Board of Regents (2015-2016)
  • — Vice-Chair (2015)
  • — Chairwoman (2016)
  • Board of Review (2020 – Current)
  • Faculty Member (2011 – Present)

You can find Tiffany Couch’s YouTube channel here. It includes ten steps to take when fraud or misappropriation of funds is found. This Board has ignored these important steps.

She has written a book that Steve has now read. He would recommend the book to anyone who is on any Board or who has any employees. The Thief in your Company by Tiffany Couch. Pages 33, 57, and 165 describe why this Board is doing what it is.  The book details steps that should be taken to protect an organization’s money. The EWUA Board is not implementing most of these suggestions.

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]

In spite of saying that they are implementing all of her recommendations, the EWUA Board has repeatedly mischaracterized what the forensic report, issued by Tiffany Couch, says. She is a current faculty member, Board of Review member, and former Board of Regents Chairwoman for the 90,000-member Association of Certified Fraud Examiners. The report issued by Acuity found serious faults with EWUA oversight procedures and found that EWUA had failed in its fiduciary duties. Acuity found numerous areas besides the probable PTO issue that warranted investigation, and Acuity offered to look at those things. The report made 12+ recommendations for EWUA to follow. It is not implementing most of those recommendations, in spite of saying they are.

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 was 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 over payment 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  (downloads as a PDF)

There are very serious problems with the EWUA Board. See for more details on some of those issues and for updates.