How could an auditor pick up any red flags to this corruption case? What could have been seen?

Previous post gave the background of a corruption case in a city near to where I live.  I’m using this actual situation as a short case study for CPAs.

Now, if you are the auditor of the city how could you possibly come across any red flags that this alleged bribery had taken place?  I don’t see how any auditor would be able to see anything out of line.

How could an auditor pick up any red flags to this corruption case? Background

When I see the details of a fraud that has worked into the public eye, I sometimes look a little deeper for my learning.  I also wonder what could have been seen by an auditor.  What catches my interest today is the criminal indictment of the mayor of Upland, California, which is the city next door to where I live.

Today’s post will provide some background.  Discussion to follow later.

There are two particular businesses in Upland that had their licenses revoked by the city.  The FBI alleges the mayor had his buddies approach each of the businesses and ask for money.  In return, the FBI says the mayor offered to intervene with different city agencies to get the licenses back.  In 2007 and 2009, the FBI claims the two businesses paid $45,000 to the mayor’s helper.  Last week the mayor and his helper were indicted.

So here’s the question: is there anything in this corruption case that an auditor could have seen that would have hinted of the existence of the scheme?