Auditor: outsourcing vs. in-house

The Knox County Commission has drawn up retirement plans for county internal auditor Richard Walls, but the fate and costs of the operation that he oversaw for more than a decade still remain in limbo.
The board, though, hopes to work something out within the next month or so.

In the meantime, commissioners on Monday will more than likely approve a severance package for Walls that gives him almost $31,000 and provides insurance coverage for 18 months. It would take effect Sept. 3.

They'll then shift focus toward his old office and determine whether to outsource the operation or keep it in-house.

"Should it be a contract employee or a county employee? There are pros and cons, good and bad to both circumstances," said Commissioner Dave Wright, who also serves on the county's Audit Committee. "Costs are going to be an issue. If there's going to be a lot done, then it will probably be better to have a county employee, but if we're only occasionally going to do something, I think we're better off to contract by engagement."

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It should be noted that the key to who will eventually take over will mostly hinge on the price tag.

KPMG, which the county would probably use if it outsourced the service, charges between $92 and $288 an hour per worker, depending on what that person does, according to the paperwork the company submitted to the county's purchasing department.

By comparison, the county pays Walls, who earns $92,700 annually and is the highest paid employee in his office, roughly $44.50 per hour.

During the bidding process, the county asked firms how much auditors would charge to perform a financial analysis of the county, and the school activity funds and to look into the Beck Cultural Exchange Center, the Hardin Valley Academy construction project and the medical examiner.

The internal audit department, which has a $257,000 a year budget, turned in reports for most of these and some others during 2012. It did outsource part of the Hardin Valley project, which cost $14,500, but that money was included in its annual spending plan.

KPMG, according to records, would charge $171,500 to oversee the five initiatives. Officials with the company could not be reached for comment Wednesday.