COEUR d’ALENE — Kootenai County Commissioners unanimously voted in favor of a forensic audit of the North Idaho State Fair's finances Monday.

Clerk Jim Brannon’s recommendation for a forensic audit in August followed an internal audit performed by his office, which revealed some fairgrounds employees had taken draws against their future pay since 2005.

Former Fair Manager Dane Dugan, who resigned Sept. 1, is noted as having taken 16 advance pay draws since 2012. Other financial data and oversight red flags surfaced.

When internal auditors initially checked out the fairgrounds — a county memo noted it appeared most financial controls of the fair were in order — they saw concerning issues on a smaller scope, which Brannon said warranted his request for a more thorough look at the books.

The commissioners expect to hire Spokane-based CPA firm Eidy Bailly for the audit, which the clerk's office estimated will cost as much as $20,000.

Subsequent to the fair's internal audit, a third-party audit by Magnuson, McHugh and Co. was near completion but closed prior to completion, by law, because of the recommendation for a forensic audit.

Fair board chairman Gerald Johnson, who said the $6,000 paid to Magnuson, McHugh and Co. is now "thrown out the window," doesn't agree with the verbiage. He said he believes forensic audit insinuates criminal activity but welcomes the process.

"We're not afraid of it at all. If they want to do a forensic audit, they can do a forensic audit," Johnson said. "We may not agree on the definition. We don't think there's been any wrongdoing, so if they want to spend $20,000 — which to us is a lot money — they should do it. Let's clear the air."

The commissioners’ debriefing Monday was slated for their small, third-floor board room, but when nearly 40 people showed up — most of whom were affiliated with the fair — it was moved to a bigger first-floor room.

Members of the clerk's office gave a PowerPoint presentation on their concerns about the fair's finances, which included oversight and record-keeping. The presentation noted a forensic audit is warranted because Kootenai County had 10 years of clean audits without detecting an embezzlement, yet that was later proved false because embezzlement had taken place.

A fraud triangle — motive, opportunity and rationalization — was also presented Monday. For further reference, officials cited the case of a fair bookkeeper in Sioux Falls, S.D., who embezzled $579,000 — stolen money detected in a forensic audit. That fair drew a parallel to Kootenai County's, namely because of bookkeeping issues and a fair manager resignation before the forensic audit.

The fair board was open to a deeper scope of its finances and said it was willing to work with the clerk's office, but Suzanne Metzger, a CPA and member of the fair board’s finance committee, noted in public comment that approach didn't gain any traction.

"After (Thursday's fair board meeting at the commissioner's board room) I turned to Brannon, I said, 'I hope we can work together and look into this,' and he shrugged, made a noise and rolled his eyes at me and walked away," Metzger said.

Commissioner Dan Green wasn't as keen on the term “forensic audit,” and Commissioner David Stewart, who has been in favor of the forensic approach, read off the legal definition to the room.

One thing all three commissioners agreed on, though, is that the audit will start the process of clarifying the fair's financial issues.

"The problem is that there's this cloud hanging (over the fair), and until the cloud is gone, nobody is going to move forward at all,” said Commissioner Marc Eberlein. “If Magnu-son McHugh won't finish their audit because of this audit, so what? We have to move this thing forward."