City leaders ordered a forensic audit as part of an investigation into the city parks department and its relationship to the Denton Parks Foundation, according to documents obtained by the Denton Record-Chronicle.
A forensic audit reviews financial records to make sure they are lawful and accurate.
Andi McNeal, director of research at the Association of Certified Fraud Examiners, said a good forensic auditor helps individuals, businesses and governments make sense of financial records.
“They are great people to call in,” McNeal said. “They review records with an investigative mindset.”
The Denton Parks Foundation was created in 1987 as a nonprofit to support city parks and recreation programs. The foundation serves as an umbrella nonprofit for the Denton Senior Center and for small community groups, such as the teams that put on the Cinco de Mayo and Juneteenth festivals in Quakertown Park.
For example, a business that wants to sponsor a community event can make a tax-deductible donation to the parks foundation for that event.
The foundation also raises and spends money to subsidize fees for kids to go to summer camps, eat healthy lunches, take swimming lessons and participate in other parks programs.
For many years, city government has provided offices for the foundation. In 2014-15, the city began subsidizing salaries, too. This year, the city is providing $77,000 in salary subsidies. The city's new auditor, Craig Hametner, had just begun an investigation into the parks department and its relationship with the foundation when he quit abruptly last month.
Marc Culp, the parks foundation president, says the foundation is cooperating with the investigation and had submitted its financial documents to city officials. According to City Manager Todd Hileman, the documents will be turned over to the new investigation team.
Earlier this month, the Denton City Council agreed to hire a law firm, Fort Worth-based Lynn, Ross & Gannaway, and a national accounting firm, BKD, to review the financial documents and make a report directly to the council. The two contracts are expected to cost $50,000.
The law firm and the accounting firm stated in their contracts they will stand by their work in court, should testimony be needed.
Neither the city nor the foundation has threatened litigation, according to City Attorney Aaron Leal and parks foundation officials. But former parks foundation president Tim Crouch said plans for a forensic audit could fuel speculation that something is wrong at the foundation.
“This inflames the story and we don’t need any more inflammation,” Crouch said.
Culp, the foundation's current president, said the foundation has already reviewed its financial controls and taken steps to tighten them. For example, he said, the foundation has begun writing a budget for its administrative expenses.
“We want the foundation to survive,” Culp said. “The city wants the same thing.”
After news of the investigation emerged in October, the city manager’s office issued a prepared statement denying that the investigation implied any wrongdoing on the part of the foundation. The investigation was focused on the “historical informality” of the relationship between the city and the foundation, according to the press release.
No one has said publicly what the investigation is about. The former city auditor received several anonymous tips about the parks department and parks foundation, which led to the investigation.
A recent audit of the Cincinnati, Ohio, parks department and foundation offers clues to what might be at stake in Denton.
In 2015, the Cincinnati parks board asked for a permanent tax levy to support city parks. The controversial measure was defeated and eventually led to an audit of parks funding, according to reports from the Cincinnati Enquirer.
In 2016, the auditors reported they could not untangle the web of funds between the Cincinnati parks department and its parks foundation. They couldn’t follow all of the money to be able to tell the public exactly how much was spent running the city parks in Cincinnati. The lack of a comprehensive budget and other practices, such as city employees using foundation credit cards, left both entities without the checks and balances that typically protect city funds, auditors said.
To get their credentials and keep them, forensic auditors keep up with the news and various financial schemes that get people in trouble, McNeal said.
As a result, forensic auditors need to be prepared to testify in court.
“Where they intersect, then yes, anyone who’s focused on such audits has the expertise,” McNeal said.
PEGGY HEINKEL-WOLFE can be reached at 940-566-6881.
FEATURED PHOTO: Families flocked to the rebuilt Eureka Playground at South Lakes Park in April 2016. The Denton Parks Foundation organized the volunteers, gathered donated materials and raised money to rebuild the park.