County raises cap on additional EDA audit expenses to $250,000

The EDA audit team prepares its report for the board’s closed session – not really. Actually members of the James Wood Chapter of The Sons of the American Revolution present a copy of the Declaration of Independence to the county supervisors at the outset of Tuesday’s meeting – and also a check for $4400 to place plaques in the public schools commemorating Joseph Warren for whom the county is named. Photos/Roger Bianchini

The annual audit to verify and balance the books of the Front Royal-Warren County Economic Development Authority (EDA) became significantly more expensive on Tuesday morning, February 5. Following a closed session, the Warren County Board of Supervisors authorized additional payments of up to $110,000 related to the audit of EDA finances and debt service payments.

The authorizations passed unanimously on motions by Vice-Chairman Tom Sayre and seconds by Linda Glavis, increase expenses incurred by additional contracted legal and accounting entities involved in the EDA audit from $140,000 to a new cap of $250,000.

The first motion authorized raising the cap on payments to Richmond law firm Sands-Anderson from $50,000 to $100,000; the second motion authorized the transfer of $60,000 to an EDA account in order to pay the audit consultant for invoices submitted for work done.

The initial authorization of an invoice payment of $90,000 to the auditing consultant for three months work done was made by the supervisors on December 21. The initial $50,000 cap on payments to Sands-Anderson was authorized by the supervisors on January 8.

The audit, begun in mid-September 2018 and now continuing into early February 2019, involves the two additionally-contracted entities, Sands-Anderson and the anonymous accounting consultant, in addition to the EDA’s traditionally-contracted auditor Yount-Hyde-Barbour. The accounting consultant’s identity has not been revealed due to a claim of attorney-client privilege by EDA counsel.

Simpler times – from left, former EDA Executive Director Jennifer McDonald, Sands-Anderson bond counsel Dan Siegel and former EDA Board Chair Greg Drescher mull over Valley Health bond issue paperwork last May.

This year the EDA audit coincided with the Town of Front Royal Finance Director’s discovery that over an eight-year period the Town had overpaid more than $291,000 in debt service payments related to three projects to the EDA. It remains unknown whether additional Town over-payments have been discovered or whether a similar situation exists on the County’s side of EDA debt service payments.

At its monthly meeting of January 30, the EDA Board of Directors appointed newest member Ed Daley to assist EDA Interim Executive Director John Anzivino to a “task force” to act as the EDA’s liaison to those contracted consultants in “the ongoing investigation” of EDA finances.

Also on January 30 in closed session the EDA board got a report from its auditing consultant from which Town and County official present were excluded.

EDA Board Chairman Gray Blanton explained the exclusion in a statement stating that the EDA was receiving new information that would “provide us a direction of how we will need to proceed as a board as we work toward better understanding the actions of our former Director in operating the Authority …”

Blanton added that once the EDA had “all the information and answered all our questions” regarding the audit it would seek meetings with the full town council and full board of supervisors “to brief them and present our plan for moving forward.”

EDA Board Chair Gray Blanton speaks with the media following Executive Director Jennifer McDonald’s resignation on Dec. 20.

Former EDA Executive Director Jennifer McDonald submitted her resignation to the board by e-mail shortly before a scheduled December 20 closed session at which her job performance was to be discussed for the second time within a week.

EDA Director McDonald submits a resignation by email prior to Thursday meeting

Following a lengthy closed session on December 14 that included a review of McDonald’s job performance the EDA board passed two resolutions removing its executive director from contract and check-writing authority and from administrative authority over the EDA’s bank accounts.

EDA board removes executive director’s authority to sign checks, contracts

A town council resolution tracing a timeline of the town government’s discovery of debt service payment irregularities involving a trio of capital improvement projects cites an August 23 meeting between town officials, the town attorney and auditors and McDonald, then EDA Board Chairman Greg Drescher and EDA Attorney Dan Whitten.

Resolution commends Town staff for uncovering over-payments to EDA

The next day Drescher announced he would step down as chairman of the EDA board, citing his work load as superintendent of public schools. Other EDA turnovers in recent months include the retirement of long-time EDA board member and Treasurer Billy Biggs on October 8, due to health and age-related issues; and the early fall retirement announcement of bookkeeper Josie Rickard, effective in December. Following Rickard’s announcement, in October the EDA announced the hiring of the accounting firm of Hottel & Willis.

Following adjournment of the Dec. 20 EDA Board meeting, EDA Attorney Dan Whitten oversees county staff locking remote access off to the former executive director’s computer. As of early February the office appears to remain in lockdown.