Amarillo city leaders are moving closer to launching a forensic audit of city finances, a decision that could help answer lingering questions about millions of dollars in previously unspent funds, budget discrepancies and financial oversight at City Hall.
During Tuesday's Amarillo City Council meeting, Mayor Cole Stanley outlined the progress made toward selecting outside firms to conduct the review. Thirteen firms responded to the city's request for quotes, and an audit committee has narrowed the field to five.
The committee hopes to hire two firms to examine several areas of city finances, including the Community Investment Program (CIP), American Rescue Plan Act funds and the city's water and sewer enterprise fund.
But beyond the technical details of the audit, the discussion highlighted a concern that has followed Amarillo's budgeting process for some time: How can city officials make informed financial decisions when the numbers they rely on sometimes change?
A History of Financial Questions
Stanley pointed to previous budget discussions in which council members received financial figures that later required corrections.
“Overall, we, as a council, and as previous councils that I’ve sat on, have seen some misstatements, overstatements, fund balances, some corrections and changes in budgets—even during budget presentations—where we thought one thing was a hard and fast number, and we come back and say, ‘Well, that wasn’t the correct number,’” Stanley said.
Budget adjustments are not necessarily unusual in municipal government. Cities manage numerous funds, ongoing capital projects and changing financial obligations. However, repeated corrections can make it difficult for elected officials and residents to understand exactly where public money stands.
That uncertainty becomes more significant when millions of dollars are involved.
In early 2024, city officials identified leftover funding from the 2016 Proposition 1 bond program. Those funds have since been allocated to projects, including the Georgia Street Reconstruction Project.
As city staff continued reviewing the Community Investment Program, they also closed out projects that had remained open for years. According to Stanley, that process identified approximately $43 million that had been appropriated but never spent for various reasons.
Finding unspent money does not automatically mean wrongdoing occurred. Funds can remain unused because projects are delayed, canceled or completed below their original budgets. Some money may also be restricted to particular purposes.
Still, the discoveries raise legitimate questions about how those balances were tracked, reported and communicated to the council.
Could Better Accounting Have Changed Budget Decisions?
Councilmember Tim Reid raised one of the more consequential questions.
Reid suggested the city should have pursued a forensic audit following previous incidents in which former city employees embezzled federal housing funds.
“The forensic audit probably should have been done when money was taken from the City, when it was stolen,” Reid said.
He also questioned whether better financial reporting could have influenced previous budget decisions, particularly those involving city services.
“I think my comment at the time was, ‘How different would have our budget been last year, as far as closing pools and things like that, if we knew we had $43 million?’”
It's a fair question, although the answer is not as simple as adding $43 million to the city's available operating budget.
Money appropriated for capital improvements may not be legally or practically available to cover everyday operating expenses. A forensic review could help clarify which funds were restricted, which were available for reassignment and whether the city had opportunities to make different financial decisions.
The distinction matters. Residents deserve to know not only how much money the city has, but also how much it can actually spend and for what purposes.
What Will the Forensic Audit Examine?
The proposed review would go beyond the city's routine annual financial audits.
Annual audits generally assess whether financial statements fairly represent a government's financial position under applicable accounting standards. A forensic audit can take a more targeted look at transactions, accounting practices, discrepancies and potential irregularities.
That does not mean the city has uncovered new evidence of fraud. The issues raised by council members include financial reporting accuracy, project accounting and the need for a clearer understanding of fund balances.
The audit committee includes Stanley, Councilmember David Prescott, former Assistant City Manager Dean Frigo, Acting City Manager Andrew Freeman and Chief Financial Officer Lola Ogunremi.
The committee is considering dividing the work between two outside firms because of the scope of the review and the approaching deadline for the city's fiscal year 2025-2026 annual audit, which must be submitted to the state by the end of March.
There are also practical obstacles.
“We’re looking at two different software systems,” Prescott said, explaining some challenges the firms may face. “We’re also looking at a lack of individuals that were present during these activities, and so both of those items are going to give us some headwinds, and it’s going to create some challenges for the team.”
Changes in accounting software and the departure of employees familiar with past transactions could complicate efforts to reconstruct financial decisions made years ago.
Those challenges make it especially important that the firms selected have the experience and independence necessary to conduct a thorough review.
Transparency Matters as Much as the Findings
A forensic audit could ultimately produce several outcomes. It might identify accounting errors, outdated procedures or weaknesses in internal controls. It could uncover additional unspent funds or confirm that previously identified balances were properly accounted for.
It could also find that some concerns stemmed from complicated reporting practices rather than improper financial activity.
Whatever the results, the value of the process will depend heavily on what city leaders do with the findings.
An audit that produces recommendations without meaningful follow-through would accomplish little. If weaknesses are identified, residents should expect a clear explanation of how the city intends to correct them and prevent similar problems.
Likewise, if the review finds no additional irregularities, those conclusions should be communicated just as clearly.
The goal should not be to assume wrongdoing or assign blame before the facts are established. It should be to determine whether Amarillo's financial systems provide reliable information to the people responsible for managing taxpayer dollars.
What's Next for Amarillo?
Tuesday's presentation was a discussion item, meaning the council did not formally approve an audit contract.
Council members expect to consider engaging one or two firms at their next meeting on October 27.
Several important details remain to be settled, including the final cost of the review, the specific responsibilities assigned to each firm and how the findings will be presented to the public.
For Amarillo residents, the central issue is bigger than any individual accounting discrepancy.
City budgets determine which streets get repaired, which infrastructure projects move forward and what services local government can afford to provide. Those decisions depend on accurate financial information.
A forensic audit cannot undo past budget decisions, and it should not be viewed as proof that something improper has occurred.
But it can provide an opportunity to answer questions that have lingered through multiple budget cycles.
