The $320,000 audit of Tucson's Rio Nuevo District did not go deep enough, and another, more in-depth investigation is needed, speakers told the Rio Nuevo Board on Monday.

About 75 people turned out at the Tucson Convention Center for the state-mandated public hearing on the Rio Nuevo audit that was released in late October.

The audit, conducted by Crowe Horwath of Los Angeles for the state auditor general, found that the city's Rio Nuevo downtown redevelopment district was beset by mismanagement and a lack of financial oversight and internal controls that left a majority of its projects incomplete after more than $230 million was spent.

It also found that more than half of Rio Nuevo's projects are incomplete or on hold; the city's Rio Nuevo financial data on projects was "abbreviated, incomplete and confusing"; and money was spent on projects not congruent with its mission.

But most speakers said the audit didn't go far enough, and they demanded either a much more intensive forensic audit or a criminal investigation. Most expressed anger at the near-complete lack of projects built downtown despite the $230 million spent. The majority of speakers were either tea-party members or other well-known political activists.

Republican blogger James Kelley demanded to know what documents weren't given to the auditors, which people refused to speak with the auditors, and where the money was spent.

Kelley said he wanted to see invoices, checks and the signatures of those who signed them, which the audit didn't have.

"We want to see a complete forensic accounting," Kelley said. "The anger that the citizens have on how this money was spent is extremely difficult to describe in a civil manner."

Kevin W. Smith, of Crowe Horwath, gave a brief report on the audit, basically reading the audit's findings - that the district's focus was far broader that it should have been; that Rio Nuevo spread its money too thin on public-works-type projects that didn't create revenue; and that the district had compliance issues and weak internal controls.

Smith and one other member of the four-member team answered questions from the Rio Nuevo Board, although Smith often seemed hesitant to answer some of the board's questions, especially those asking for his opinions.

The reason the audit didn't have copies of financial transactions was that the firm was hired to do a performance-type audit, he said. There are three types of audits, he said: a financial audit that looks at basic financial statements, a performance audit, and a much more intensive forensic audit that looks at the paper trail in far more detail.

Smith said the firm "sampled" financial transactions such as invoices and checks, spending more time on larger expenditures. "We were not engaged to analyze every transaction in the last 10 years," he said.

When asked what it would take to do a forensic audit of Rio Nuevo, Smith said he thought it could cost well above $1 million and could take thousands of hours of work, most of which would have to be conducted at Tucson City Hall.

A forensic audit is a tremendous undertaking because its scope is so much more broad and because it can lay the foundation for criminal charges, said Kurt Sjoberg, of Sjoberg Evashenk, a subcontractor of the auditing firm.

Barney Brenner, a former Republican political candidate, said the audit was not exhaustive because it didn't show whether money was stolen or criminal charges should be filed. He called that "unacceptable."

When asked if he saw evidence of criminal activity or suspected any, Smith, the auditor, said no.

Local historian Ken Scoville said the new Rio Nuevo Board - appointed this year by the state - needed to hold those responsible accountable to save its own credibility.

"Go get some blood out of this," Scoville said.

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"The anger that the citizens have on how this money was spent is extremely difficult to describe in a civil manner."

James Kelley, a Republican blogger

Contact reporter Rob O'Dell at or 573-4346.