Detroit Riverfront Conservancy searches for new auditor
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The Detroit Riverfront Conservancy says it remains committed to completing the Ralph C. Wilson Jr. Centennial Park and its other projects. Rendering courtesy of the Detroit Riverfront Conservancy
The Detroit Riverfront Conservancy has launched a search for a new auditor as the nonprofit attempts to regain its footing following embezzlement charges against its former CFO.
The big picture: Since the alleged embezzlement scheme came to light in the spring, the Riverfront Conservancy has taken several actions, including installing new leadership and filing a civil suit to recover the stolen money.
- "The DRFC is determined to overcome this unprecedented challenge," the suit reads.
Driving the news: The conservancy is going through a request-for-proposals process for an auditor and is considering three firms, a conservancy spokesperson confirmed to Axios on Thursday.
- The nonprofit expects to decide within about a month, per the spokesperson.
- The conservancy spokesperson declined to answer further questions, including why the organization is seeking a new auditor.
Context: The conservancy, founded in 2003, has used George Johnson & Co. (GJC) as its auditor for the last 17 years, since 2007.
State of play: Federal prosecutors charged former CFO William Smith in June with bank and wire fraud, accusing him of stealing $40 million over 11 years, from late 2012 until he was suspended this spring.
- The alleged scheme involved falsifying bank records and transferring funds to a personal bank account, according to the federal criminal complaint and the conservancy's civil complaint.
- Smith's federal case is proceeding slowly because the allegations cover a long period of time and the documents involved are voluminous.
- A federal magistrate judge granted a 30-day continuance Friday so both sides can investigate and discuss a possible resolution, according to court documents.
Between the lines: GJC audits of the conservancy's financial statements included "obtaining reasonable assurance" about whether the statements were "free of material misstatement," according to a letter sent to the board in 2022 that was obtained by Axios via a public records request.
- The auditor worked in cooperation with management and other personnel, according to a December 2022 audit wrap-up presentation for the board.
- The audit's areas of focus included cash and investments, contributions, expenses and accounts payable, and payroll, among other areas.
- Axios visited GJC's downtown office Friday and left a phone message but company officials could not be reached for comment.
Audits generally reflect an organization's financial health and compliance with regulations. But they aren't intended to be ironclad assurances against wrongdoing.
Catch up quick: The conservancy announced in May that Ryan Sullivan would be its new interim CEO. Sullivan kicked off a plan for moving forward that includes preserving the conservancy's legacy, pursuing justice against those involved in the embezzlement, protecting the conservancy in the future, and ensuring its prosperity, the Free Press reported.
- The conservancy also received financial relief, as the local philanthropic community committed in late June to raise $35 million to help it complete construction projects along the riverfront.