John Bailey

By Josh Davis, Associate Editor

(Oct. 18, 2018) Baltimore-based firm Gross Mendelsohn & Associates will move into phase two of a forensic audit of the Ocean Pines Association’s finances, the association announced last week.

General Manager John Bailey said the first phase cost about $100,000, leaving around $125,000 budgeted for additional work.

Phase one focused on food and beverage operations, while phase two will explore finances inside the public works department, according to an association press release.

The release said the Ocean Pines Board of Directors voted to approve the phrase-two audit via email, which is permissible “if the Directors unanimously agree to allow such a vote to occur.”

Votes to address the issue via email and to move forward with the next phase were unanimous, the release said.

Bailey, in an interview last Thursday, said forensic auditors during phase one went through financial and credit card transactions, point of sales systems, deposits, personnel and payroll records, and purchase orders related to food and beverage.

“They conducted a lot of interviews. They also interacted with [the Worcester County Bureau of Investigations],” Bailey said. “We had some records that were subpoenaed.”

Interim reports on work done to date are viewable online at oceanpines.org/forms-docs-cat/audits.

Bailey said some of the details would not be released until the entire forensic audit is complete.

As for allegations of theft occurring, he offered, “They have some substantial things to report on. We just want to wait until the whole thing is done, so we can deal with it all at once.”

Bailey added phase two was triggered “more by other factors,” rather than because of specific evidence discovered by investigators.

“There were some purported things that took place in the public works department some years ago,” he said. “It’s really focusing on May 1 of 2016 to April 30, 2018, where they’ll be looking at all the financial activities related to the public works department, which is basically the purchase orders and the contractual arrangements that we had with different contractors.”

Bailey said he is unsure if future audit phases would be required.

“Right now, I don’t know if there’s another area that they would have to go into, because the public works activities get into contracts and purchase orders for all sorts of other, different departments where the work was done,” he said. “While all these transactions are associated through maintenance and public works contracts, that doesn’t mean all those contracts were related to work that was done in the public works building.

“It might have been a contract that was at the country club or the pools, or wherever. That’s what they’re going to be looking into,” Bailey added.