Auditor cuts ties with appraisal district as new details emerge in City of Presidio 2018 audit

The longtime auditor for the appraisal district cut ties with the board late last week, citing his lack of faith in its chairman.

PRESIDIO COUNTY – The Presidio County Appraisal District is now looking for a new auditor to review its 2020 financial records as its longtime auditor, Doak Painter, cut ties with the board last week. In his letter of resignation obtained by The Big Bend Sentinel, Painter wrote, “We have reached our decision reluctantly and after substantial deliberation, but we have lost confidence in the integrity of your entity’s governing body, specifically the Chairman of the Board.”

The fallout began after the publication of an article in The Presidio International that detailed the findings of the City of Presidio’s 2018 adverse audit which was conducted by Painter. In the story, Presidio Mayor John Ferguson said that the results of the audit came in later than he expected and that there was a lack of communication between the city and Painter. As The Big Bend Sentinel previously reported, the city lost out on a grant to purchase two new ambulances after it was unable to produce these up-to-date audits.

Following the publication of last week’s audit story, Painter wrote an email to Ferguson and Brad Newton, the interim city administrator, saying that he had been “thrown under the bus.” Painter wrote, “You always want to blame the auditor for not being able to obtain resources, in this case an ambulance, when your documentation and financial statements were a wreck. My job is to come in and audit your procedures and corresponding transactions. It is not the job of the auditor to perform transactional accounting or to put the financial statements together.”

Shortly after writing that email, Painter submitted his letter of resignation to the county appraisal district, citing his lack of faith in its chairman, who is Mayor Ferguson.

New details on Presidio’s 2018 audit

While Painter would not comment on the record in last week’s story, he did enumerate the issues he had while conducting the city’s 2018 audit in his email to Ferguson and Newton.

Painter said that the reason the city’s audit was delayed is because he, “was attempting to salvage the 2018 audit by being able to back into the correct numbers once [he] had the 2019 audit completed.”

As he wrote in his email, Painter was in the process of performing the 2019 audit – and had nearly completed it – until he discovered that the city was not managing its water and sewer funds properly. He wrote, “You had been on your new accounting system for over a year and a half and still had your water and sewer billing system on a cash basis when it is required by law to be on a full accrual basis.” In general, an accrual basis system gives a more accurate picture of a city’s financials.

“In my email to each of you and to the finance director I expressed my concerns that this was a major red flag and as the auditor I could tell there was a lack of oversight and no one was taking their fiduciary duty to the tax payers of the City seriously,” the auditor wrote.

The final straw for Painter came when he learned Joe Portillo – the previous city administrator who was in charge of the city’s financial books – had resigned and no one had told him. In an email obtained by The Big Bend Sentinel, Painter wrote to the heads of the city administration on February 14, “I believe it is in the best interest of my firm to withdraw from future dealings with the City of Presidio. I intend to submit a formal resignation letter for my services regarding the audit of the annual financial report for the fiscal year ended September 30, 2019.” Portillo had officially resigned just four days prior to Painter’s email.

As reported in last week’s story, one of the biggest findings from the 2018 audit was that the city administration regularly failed to file quarterly payroll reports and pay the corresponding taxes to the IRS. Through a public records request, The Big Bend Sentinel obtained all of the quarterly reports from the fiscal 2018 year, which threw that finding into question.

Following last week’s story, Painter acknowledged that he might have erred in that respect. “I should’ve changed that finding, but maybe that’s a mistake on my part. If I go back I could change that finding and say the first quarter was wrong,” he said, adding, “Maybe they did the last three quarters correctly. But I know for sure that I did the first one, or that my wife did the first one.”

In his email to the city administration last week, Painter explained why he had docked the city for not filing the quarterly reports in the previous audits. “No one in the City even knew how to complete a form 941 [the quarterly payroll reports] before I arrived and my wife, who is also a CPA, had to come and teach your staff how to fill one out,” he wrote. “And she personally filled out all the form 941s for fiscal years 2013 – 2017 to be sent in to the IRS and also so I would have something to put in my workpapers and be able to compare the results to your reported payroll amounts.”

In a statement to The Big Bend Sentinel, Ferguson acknowledged the city’s past recordkeeping woes, writing, “The City of Presidio is focused on addressing all documented deficiencies in our internal fiscal controls that were brought to light in our most recent audit. Since this past February, city staff have been utilizing every resource at their disposal to ensure that required financial records will be available for the fiscal year 2019 audit. The City is an open book and we readily admit to our previous shortcomings. At the same time, we are looking forward to demonstrating to our citizens that we will get our financial house in order in a timely manner and have processes in place that promote healthy financial audits going forward.”

As for the appraisal district, the board is now in search of an auditor to complete its 2020 audit. The chief appraiser for the district, Cynthia Ramirez, said that the audit will most likely not be submitted in a timely fashion, which will cause the district to fall out of compliance with the state.

Ramirez said she was shocked to learn that Painter had pulled out of the audit. “We’ve always worked well with Doak. He’s always been a good auditor, and it just completely caught me off guard when I received his email,” she said. “The reason why he did it was even more shocking to me. It was quite upsetting to me that he would do that to the district. I wish he would’ve at least completed the audit for this year.”