FRONT ROYAL - The Front Royal-Warren County Economic Development Authority has not finalized its fiscal year 2018 audit, which is nearly eight months overdue.

The delay in finalizing the audit comes amid a vast embezzlement scandal allegedly perpetuated by Jennifer McDonald, former EDA executive director, who is in jail without bond on 14 felony counts of embezzlement and obtaining money by false pretenses. Michelle "Missy" Henry, former EDA administrative assistant, and Donald Poe, a local businessman, have also been charged stemming from alleged wrongdoings related to the authority.

Douglas Parsons, EDA executive director, explained at the authority’s meeting last week that a study by Cherry Bekaert - a firm that has been paid about $486,000 to investigate the EDA’s finances - did not provide everything needed to complete the audit, which is usually presented to the board in January.

He said that while Cherry Bekaert provided proposed “adjusted journal entries” for EDA assets, it did not provide proposed adjustments for entries related to debt services and capital.

EDA and County Attorney Dan Whitten said over the phone Monday that Carolyn Stimmel, the EDA’s part-time accountant, and Hottel and Willis, the firm serving as the EDA's bookkeeper, are working with the Winchester-based Yount Hyde and Barbour auditing firm to sort out the audit.

Parsons said completing the audit is "going to take some time," and while hopefully it will be finished within 60 to 90 days, he ultimately does not know when it will be ready. The audit has been delayed several times. John Anzivino, former interim EDA executive director, said in February that it should have been completed by the end of that month.

“We have to untangle, you know, a lot of our debt in order to more accurately represent it because everything was jumbled together as it relates to draws on projects,” he said.

Whitten said Monday that Yount Hyde Barbour has been the EDA’s auditing firm for 10-plus years. When asked if the firm should have caught any illicit financial activity, Whitten said that he “can’t speak for the auditor” but added that McDonald presented the firm “fraudulent, manipulated documents.”

Whitten said he expects that Yount Hyde and Barbour will preform the authority's fiscal year 2019 audit, the completion of which should not be delayed. He said it is up to board members whether the EDA continues using Yount Hyde and Barbour after the 2019 audit. He added that the EDA is “not engaging Cherry Bekaert anymore” and there will be no further payments to the firm unless the board desires further investigation.

Since the county funds a portion of the EDA's operating budget, County Administrator Doug Stanley said on the phone Monday that the county cannot finalize its audit – which is usually done in January – until the EDA completes its audit. Besides the EDA component of the county’s audit, Stanley said everything else is complete.

He said one negative aspect of not having the audit complete is that the county’s bond rating may be negatively affected and the sooner the audit is complete the better. As of now, he said the county’s bond rating has not been affected but “the longer it drags on, the more it hurts.”

Stanley said the county has “kind of been sitting and waiting" on the EDA, noting that it will be time to begin the 2019 audit “before we know it.” He stated in an email that the county is "researching the impact of moving forward without the EDA information and any impact it will have on the audit."

Authority board member Ed Daley noted that Warren County is one of about 10 Virginia localities to not finalize an audit and “we don’t like to be on this list.” He said the EDA needs to get an exact timeline for the audit.

– Contact Josh Gully at