State Auditor Gary Jones stepping aside on health department special audit

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OKLAHOMA CITY – A back-and-forth battle involving an investigation into the Oklahoma State Department of Health’s finances has taken an unexpected turn.

An audit of the agency was announced in October amid allegations of financial mismanagement and following the resignations of former commissioner Dr. Terry Cline and senior deputy commissioner Julie Cox-Kain.

State Auditor Gary Jones told an investigative committee that he met with State Financial Director Preston Doerflinger on Sept. 7 regarding OSDH’s financial concerns. They had briefly texted about concerns the week prior.

“This is the first time ever in seven years that we had felt something had risen to a level that it needed to be reported immediately,” Jones told reporters last week. “At that particular point in time, I was very emphatic on the fact that the people within the organization were saying this.”

Doerflinger admitted there were conversations with Jones earlier this fall but maintained he was not aware of the significant problems until the late October meeting.

“That is when I became aware of the crisis at hand. Gary said there were problems or issues at the state department of health. I became aware of the gravity of the situation as I described in my testimony yesterday in front of the investigative committee,” Doerflinger said last week.

Earlier this week, Doerflinger got into a war of words with Jones as the two pointed fingers over who’s to blame for the mess at the Oklahoma State Department of  Health.

Doerflinger says Jones learned about the financial issues at the health department on August 1, but waited to do anything about those concerns.

“It is baffling to me that this information was received August 1 and nothing was done with it at that time. Nobody was informed by the state auditor’s office about this situation as it was presented to them on that day,” Doerflinger said.

However, Jones says he had to verify the information first before alerting anyone else. He says once he alerted Doerflinger’s office, they failed to take swift action.

“We had to verify that the information was indeed correct that it was going to cause eminent damage to the state of Oklahoma, that it was not something that could be fixed after we did our audit report and that we had to breach our normal audit standards and go to the responsible party and notify them,” Jones said.

Data pix.

On Thursday, Jones announced that he was taking an ethical stance and stepping aside on the audit.

"Ethics and Independence are the cornerstone of the work we do at the Office of the State Auditor & Inspector. As such, every audit our office conducts must be beyond reproach, without interference from outside parties. We conduct audits on behalf of Oklahoma taxpayers, not agency heads, governing boards or elected officials. As a result, we are free from certain influences which might seek to compromise our independence.

At issue is whether the personal bias of the auditor might impair his or her judgment in adequately and appropriately reporting on the content of the audit.

I can tell you I personally have one overriding bias – to find the truth and report it without fear of consequence. During my time as State Auditor, we have not changed an audit finding or omitted facts to convenience the client. Auditors document everything. We check every finding to ensure every item contained in an audit report is fully supported. I prefer for the final audit report to speak for itself because the truth is its own defense.

The audit process is often slow and methodical. While a financial statement audit is limited, by its very nature, in both scope and depth, auditing standards do provide a vehicle by which an auditor can be informed by management of concerns regarding the financial status or health of the entity that is subject to the audit.

In conducting our audit of the state’s FY17 Comprehensive Annual Financial Report (CAFR), the potential of significant fiscal mismanagement at the Oklahoma State Department of Health was brought to our attention. We had an obligation to review the information in order to confirm its content.

When that review substantiated that the agency was unlikely to meet its payroll obligations within a few months, we determined the situation was outside the normal conditions we encounter in an audit and warranted specific treatment.

Auditing standards require that we communicate such matters to the appropriate level of management. In this matter, that person was the state’s Cabinet Secretary for Finance who also served as the Director of the Office of Management and Enterprise Services (OMES) and was, effectively, the person who has ultimate responsibility for the State’s accounting and financial reporting.

Since that time, considerable grandstanding has occurred to both obscure the facts of this matter and to deflect the focus from finding a solution. This is not the time for any public official to try to manage either the public narrative or the outcome of this investigation. While, for me, this process is not personal, it may appear to be so because of what has been labeled “finger pointing” and “the blame game” – particularly when it became clear that the breadth of this matter could not be controlled or contained.

I treasure the standards by which we conduct business. I know the level of professionalism and integrity we maintain within the State Auditor’s Office. While I’m confident my personal independence and the independence of this office have not been compromised, the work we do is too important for even the appearance that a personal bias might impair the audit process or product.

To ensure the integrity and public confidence of the special audit currently being conducted of OSDH, I have decided to remove myself from the audit process and the review and release of the final report. Those comprehensive oversight responsibilities have been turned over to the Deputy State Auditor for State Agency Audits. This is professional, not personal, so I will learn of the content of the investigative audit when the audit is released.

As State Auditor, I made a similar decision one other time when my public comments about spending by former Attorney General Scott Pruitt were called into question at the time we were about to begin an audit of his agency. We do not conduct audits in the open or in the media and that cannot be allowed to happen here," a statement from Jones read.

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