City Council accepted the final audit report of the 2016-2017 fiscal year and commended the finance department for its improvements.
Audit Manager Kyle Foutz of accounting firm Piercy Bowler Taylor &Kern presented the audit at Tuesday’s council meeting.
The audit found one material weakness and two smaller deficiencies as well as the need for better classifications for fixed assets and capital outlay, a proper period of expenditures, better recording of payroll increases, better recording of debt payments, better review work of deposits for golf course revenue, a safer location of blank check stock and better control of city membership cards.
Councilman Rich Shuman said he was pleased with the audit and that the number of material weaknesses had decreased from six several years ago to one this year.
“What … this audit shows is we’re doing a very good job accounting for the money and the processes that go along with it,” he said.
In December 2015, an audit found that $50,000 was missing and unaccounted for because of several utility deposits not being put into the city’s bank accounts.
The material weakness in this year’s audit was an ineffective month-end/year-end closing process that had previously been reported to the city by the firm. It forced adjustments to be made in order to clean up various balance sheet accounts for the year end, many of which should have been fixed before the audit.
At the audit review committee’s meeting on Nov. 30, Acting Finance Director Doug Honey said that finance department was already implementing procedures to fix that weakness and the other issues that had been singled out.
Councilman Kiernan McManus agreed with Shuman but also said that he was worried about the finance department being understaffed and how it affected financial procedures.
“The concern I have is that when we do have a department that is understaffed, things get missed,” he said.
He also said that Honey did a good job in making sure things did not get missed.
In addition, McManus suggested that the audit review committee meet biannually instead of once a year at the end of the fiscal year and before the audit presentation rather than just the latter, and that the audit material be included in budget workshops so the public can be informed.
Foutz said that he would be more than willing to participate in biannual meetings.
Councilwoman Peggy Leavitt concurred with McManus about the issue of finance department being understaffed and commended Honey’s work.
Honey said that there is a great staff in the finance department and everyone pitches in when it is understaffed.
Council unanimously accepted the presentation, and the city’s new Finance Director Diane Pelletier said that she was looking forward to helping next year’s audit go even better.
The membership card issue stemmed from an employee’s personal use of the city’s Costco membership card. The city gave employees these cards to make purchases for the city. One employee used $110 of the Costco rebate. According to the city, the employee did this in error and attempted to make amends for it. In addition, this personal use of membership cards could allow employees to make purchases for themselves without paying sales tax, which is illegal.
To remedy the situation these membership cards are now held in the financial department, and employees have to check them out and then reconcile purchases made with them.
The membership card issue was brought to light after former finance director Hyun Kim would not sign a representation letter for the audit because of how the language addressed it.
“It had a blanket statement that they wanted me to attest to, but I couldn’t,” he said during a phone interview from his new position in Washington.
He also said the he requested a revised letter from the auditors and said he planned to sign it when it arrived.
Richard Bowler of Piercy Bowler Taylor &Kern said the firm “did satisfy ourselves that he had given us adequate representation” and that whether he signed something or not isn’t relevant. What is relevant is that the firm had satisfied itself in terms of the representation, he said.
Contact reporter Celia Shortt Goodyear at email@example.com or at 702-586-9401. Follow her on Twitter @csgoodyear.