'We did not conduct an audit': Augusta mayor's credit card report cites lack of bids, policy

The city’s internal auditor questioned little about Mayor Hardie Davis’ credit card spending in the report Davis had them do but the report raised more questions for some in Augusta government.

Davis called for an “audit” on June 14 after what he said were “unsubstantiated allegations” he had misused the city credit card he was issued upon taking office in 2015.

Now in his seventh year of office, Davis has increasingly relied on plastic for purchases over the past two years, including monthly bills over $10,000 in March, April and May and an April statement for $17,459. Charges range from recurrent fees for various internet services to individual payments to consultants for thousands of dollars.

What is being presented Tuesday to the Augusta Commission is not an audit, however, of the type to give any opinion about the spending, the report itself said.

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“We were not engaged to, and did not conduct an audit,” said the report, signed by Serotta Maddocks Evans & Co., CPAs, “the objective of which would be the expression of an opinion.”

The firm’s audit manager, John Snider, is scheduled to present the report at the regular Tuesday Augusta Commission meeting at Davis’ request. A firm representative did not return a message seeking comment.

The report includes a handful of recommendations, one of which the commission already addressed – adopt a credit card policy. Georgia law requires one for all cards issued as of Jan. 1, 2016, and city officials said they interpreted it to exempt Davis’ card.

In one instance, Davis’ spending with a third-party vendor exceeded the $10,000 threshold requiring competitive bids for the total of $24,969 spent with LC Studios LLC. Despite Augusta’s local-vendor-preference policy, LC Studios is located “in Florida,” it said.

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The accountants used a method called a Benford analysis to determine which expenses to examine.

When the first digit of the dollar amount occurred more or less frequently than expected, expenditures starting with that number “were subjected to sampling,” it said.

Of Davis’ hundreds of transactions, the firm used a sample size of 47 from the mayor’s office, the report said. While it wasn’t part of Davis' call for an audit, the firm also looked at his My Brother’s Keeper spending, using a sample size of 33 transactions. In 2017, The Chronicle reported Davis was using the youth program funds to pay Republican strategist Ryan Mahoney.

Reviewing the expenses, auditors said they found an agreement, invoice or contract, as well as an “official city use” associated with payment “for all transactions.” The only exceptions were one airfare, one hotel stay and one electronics purchase, for which Davis’ office generated documentation, the report said.

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The firm looked at whether Human Resources was paying Davis’ staff their listed salaries and withholding the appropriate amounts. It created pie charts breaking down how he used the card, based on spending category. The “economic development – public relations” spending – which was typically with LC Studios and other consultants, made up nearly half of his 2020 spending, it said.

Davis stayed under his total budget of $491,780 during the year, it said. Davis’ highest-paid employee, Chief of Staff Marcus Campbell, resigned in early 2020 and wasn’t replaced until around September with new Chief of Staff Petula Burks.

Despite the seemingly positive report, the din of calls for a “forensic audit” of the city government continued Monday. Several commissioners have called for the audit of all city departments – a costly undertaking – after Davis’ heavy credit card use surfaced. They repeated the call after Commissioner Sammie Sias was federally indicted last month for activities connected with public spending at a city-owned community center.

As for why the commission did not institute the credit card policy required under state law when the law changed in 2016, Commissioner John Clarke, who took office in 2018, said he didn’t know.

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“We’re not attorneys. We get our legal advice from our city attorney,” Clarke said. “I don’t know if it came before the commission.”

While General Counsel Wayne Brown has been on city staff since 2008, he did not become lead city attorney until 2019.

Clarke said he was curious about “the reaction” his colleagues will have to the report but believes the forensic audit, which looks for wrongdoing, is necessary. Commissioners who have opposed seeking an audit, citing a lack of suspicious activities among department heads, declined to comment about the report Monday.

“A forensic audit of the city finances would clear up a lot of questions,” Clarke said.

Commissioner Catherine Smith McKnight said she has confidence in Serotta Maddocks Evans but was skeptical about the report and remains in support of a forensic audit.

“It was what I expected, and really to me it doesn’t look like an audit,” McKnight said. “After looking at this, we need a forensic audit. We’ve got to earn back the trust of our citizens.”