By Mike Donila, WBIR
The Knox County Commission has drawn up retirement plans for county internal auditor Richard Walls, but the fate and costs of the operation that he oversaw for more than a decade still remain in limbo.
The board, though, hopes to work something out within the next month or so.
In the meantime, commissioners on Monday will more than likely approve a severance package for Walls that gives him almost $31,000 and provides insurance coverage for 18 months. It would take affect Sept. 3.
They'll then shift focus toward his old office and determine whether to outsource the operation or keep it in-house.
"Should it be a contract employee or a county employee? There are pros and cons, good and bad to both circumstances," said Commissioner Dave Wright, who also serves on the county's Audit Committee. "Costs are going to be an issue. If there's going to be a lot done, then it will probably be better to have a county employee, but if we're only occasionally going to do something, I think we're better off to contract by engagement."
Officials roughly two years ago began looking into whether to outsource the internal audit department, a $257,000 a year operation that includes three people who look into county departments and county projects and report directly to the commission and the Audit Committee.
The county began taking accepting proposals to oversee the work late last year, and in February a handful of public accounting firms made pitches to the Audit Committee.
In the end, the panel suggested it would pick Atlanta-based KPMG, which at one point served as the county's external auditor before its contract expired.
But, "it was pretty clear there was some real hesitation," said Audit Committee Chairman Joe Carcello, referring to the direction the committee would recommend.
"In a perfect world, I think it's better to have the function in-house," he added. "The question is: Can we identify a candidate where most of the people who have to be involved in the decision feel good about the candidate? If that's the case, then I think that's probably optimal."
WHICH DIRECTION TO PICK
The county established its internal audit department in 2001 at the recommendation of a seven-month study conducted by the Government Efficiency Panel that looked for savings in local government. At the time, language also was included into the county's charter directing officials to maintain such an auditing service.
What it will be, though, remains to be seen.
"I think we need to look at the department's structure, function, purpose and mission," said Commissioner Mike Hammond, who served on the efficiency panel prior to joining the commission. "I'd like to see what they do in other counties and how they're structured."
Hammond said outsourcing the operation "is an option for the short term" if Walls, as expected, accepts early retirement. But, Hammond doesn't feel that's it's best for the long term.
Commissioner Mike Brown agreed.
"The internal auditor is a must because they have an inside track on what is going on, and it's much easier to get in touch with them," he said. "I'd like to keep it in-house."
Walls, who was hired in February 2001, declined to comment Wednesday.
In early July, the Audit Committee in a 4-1 vote recommended his firing. Only Mary Kiser, who resigned in response to the decision, dissented.
Committee members called his work "limited," but Kiser argued that no one bothered to give him feedback and said that the recommendation was "unfair."
COST OF DOING BUSINESS
Key to who will eventually take over will mostly hinge on the price tag.
KPMG, which the county would probably use if it outsourced the service, charges between $92 and $288 an hour per worker, depending on what that person does, according to the paperwork the company submitted to the county's purchasing department.
By comparison, the county pays Walls, who earns $92,700 annually and is the highest paid employee in his office, roughly $44.50 per hour.
During the bidding process, the county asked firms how much auditors would charge to perform a financial analysis of the county, and the school activity funds and to look into the Beck Cultural Exchange Center, the Hardin Valley Academy construction project and the medical examiner.
The internal audit department, which has a $257,000 a year budget, turned in reports for most of these and some others during 2012. It did outsource part of the Hardin Valley project, which cost $14,500, but that money was included in its annual spending plan.
KPMG, according to records, would charge $171,500 to oversee the five initiatives. Officials with the company could not be reached for comment Wednesday.
"The costs are always going to vary depending on how much work they'll have to do," Wright said. "So, the commission is going to have to give this a good thorough discussion."
If the board opts to keep the department in-house, officials said they will advertise for the position, accept resumes and then let the board interview the candidates.
The process would more than likely take at least a month.