City attorney for Cairo alleges audit being delayed intentionally

Thursday, April 13, 2006

The audit is crucial in any effort to correct the city's financial condition.

CAIRO, Ill. -- The long-anticipated audit of Cairo city funds for the year before Mayor Paul Farris took office is being deliberately delayed, city attorney Alan McIntyre charged Tuesday evening.

During a discussion of the audit at the start of the regular city council meeting, McIntyre alleged that David Seabaugh was engaged in a pattern of conduct that clearly shows he is delaying the audit.

The conduct includes repeated requests for information that McIntyre believes to be irrelevant to city finances during the period in question, such as information about lawsuits currently pending by the city and an evaluation of the likelihood of the city prevailing, McIntyre told the council.

"He said he wants something, then a month or two later he wants something else," McIntyre said. "A little later, it is something else. I am not going to give the auditor privileged communications."

Seabaugh is a partner in the Cape Girardeau accounting firm Beussink, Hey, Roe, Seabaugh and Stroder LLC. The audit underway covers the year from May 1, 2002, to April 30, 2003. Farris took office on May 1, 2003.

In a telephone interview Wednesday, Seabaugh declined to respond to McIntyre's charges.

"I was not at the meeting, and I have no idea what was discussed," he said. "I cannot discuss, due to confidentiality reasons, any current, past or ongoing audits our firm may be participating in."

The audit is crucial for any effort by Cairo to correct the city's precarious financial condition. State law requires an annual audit. On Feb. 1, First National Bank in Cairo declared the city in default on its bond obligations because bondholders haven't received an audit for nearly four years.

A lack of an audit could also create difficulties for the city as it seeks new or continued grants from state and federal governments. Most of Cairo's revenue comes from outside sources rather than from local taxes paid by its residents.

After the audit of fiscal year 2003 is completed, the city must also conduct audits for fiscal years 2004 and 2005.

By seeking information on lawsuits and the city's potential liabilities, McIntyre said, Seabaugh is going beyond the scope of the 2003 audit. Most of the pending lawsuits against the city have been filed since Farris took office. The cases range from a fight over city payments to the town library board to employee grievances and a small claims case between Farris and four council members over their pay.

Another crucial issue, Farris and McIntyre said, was the wording in a "management representation letter" that would accompany the audit. Basically a statement of what city leaders provided the auditors, Farris and McIntyre want it to include wording that Farris has disclosed all allegations of fraud known at the time of the audit.

The audit should reflect findings of fraud and mismanagement, Farris said. "I provided documentation of every case where I suspected fraud," he said.

Farris said he believes Seabaugh is acting at the behest of his opponents on the council. "The auditing firm is purposefully proceeding this way because the council wanted him to," he said.

rkeller@semissourian.com

335-6611, extension 126

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