Island Transit director protests audit
October 2, 2011 · Updated 5:23 AM
Martha Rose is more than a little indignant about this year’s audit of Island Transit by the state Auditor’s Office.
Rose, the executive director of the transit agency, said two findings by the auditor’s office are unfair and just plain wrong. She said Island Transit’s attorney, a statewide expert in transit-related law, agrees with her. She plans to take the unusual step of appealing the findings, even though the state auditor’s reports are strictly advisory and carry no repercussions.
“We have an impeccable audit record,” Rose said. “We always welcome the auditors because we want to make sure we are doing everything right. Having an extra set of eyes makes sense. But when they issue findings and we don’t see any basis for them, we just don’t think it’s fair.”
The Washington State Auditor’s Office released its 2010 financial and accountability audit reports on Island Transit this week. The accountability audit reported two findings, or areas of concern, regarding employees’ use of vehicles and the agency’s competitive bidding process.
Rose said she considers a finding to be an “egregious error” or a sign of “wrongdoing,” and she said there’s no evidence of either.
Mindy Chambers, a spokesperson for the state Auditor’s Office, said it can be a judgment call as to whether an auditor issues a finding or a less prominent “management letter.” She said the purpose of issuing a finding isn’t to punish or embarrass, but to help agencies do a better job of protecting public resources. She said the auditor’s office stands by the reports, but she didn’t want to argue point-by-point with the director of the transit agency.
Perhaps the most consequential of the two findings is that, according to the report, Island Transit “did not follow its own bid policies and does not have policies related to approval and monitoring of change orders.”
The report states that Island Transit spent $3.4 million on capital projects in 2010. The report claims that the transit agency purposely broke a project to build a Coupeville park-and-ride facility into phases in order to avoid going out for bid. The agency’s policy is that purchases of more than $100,000 require a formal bidding process, but the agency’s $434,000 project was split into five phases and was done with price quotes instead of bids.
Rose, however, is adamant that the project wasn’t phased to avoid a bid process, but because it was the only logical choice to avoid dislocating transit parking. It was taking a long time to get the various permits for a park-and-ride lot from the town of Coupeville, so she decided to go ahead and do the phases of the project as the permits came in.
“We had no other choice but to phase it,” she said, adding that she was constantly on the phone with the auditor’s office during the project to ensure she was doing things correctly.
In addition, the auditor’s office found that the transit board inappropriately delegated its authority to the director by authorizing her to execute any and all documents related to development of a new transit center. As a result, Rose authorized an $859,000 change order on the design of the transit center without a vote of the board; it wasn’t required, she said, because she had prior approval and it was absolutely necessary because of the substantial growth in demand for the transit services since the plan was first created.
While the auditor asserted that the board of a public transportation benefit area cannot delegate its authority, Rose said she’s asked the auditor’s office for the statute that says that; she hasn’t received an answer.
Nonetheless, Rose agrees with the auditor’s recommendation that the transit board set up a threshold for change orders, over which board approval would be required. By comparison, in Island County government most non-elected department heads can’t spend more than $10,000 without going to the board of commissioners; the public works director has a $20,000 threshold.
Rose said the threshold policy is currently being written.
The other finding, according to the report, is that Island Transit “did not monitor vehicle and fuel card use to ensure they are only used for official purposes.” In addition, it states that some vehicles aren’t properly marked, as required by state law, and that members of the transit board misread a state law regarding requirements to mark vehicles.
Island Transit has 74 buses, 88 vanpool vehicles and 42 vehicles for staff use. The auditor’s only concern regards 12 vehicles and accompanying fuel cards that are assigned to employees, who are allowed to take them home.
Rose said vehicle and fuel use cars are monitored for all vehicles, including the 12 permanently assigned to employees, but a long-held system of double-checking vehicle use logs wasn’t extended to those dozen vehicles. She said she understands the auditor’s concern and she has already formalized a better tracking method; the board adopted a new vehicle and fuel use policy last month.
Still, Rose asserted that the minor issue shouldn’t rise to the level of a finding. She pointed out that past audits never found a problem with the issue.
In addition, the auditor ruled that Island Transit is incorrect in asserting that the cars are not an employment benefit for the employees who take them home. The audit states that if employees are not informed of their complete benefit compensation, they may owe additional income taxes.
But Rose said the auditor’s office is wrong. She said the cars are not a benefit because the employees are required to bring the cars home so they can respond at all hours to system needs, such as accidents, road closures, mean passengers or bad weather.
And finally, the auditor claims that Island Transit is violating state law by having six “unmarked cars.” The report claims the transit board is misreading a state law regarding the marking of government-owned vehicles.
Once again, Rose contends that the auditor’s office got it wrong. She explained that some managers drive unmarked cars so they can do undercover surveillance of transit stops. She said in a time of dwindling resources for law enforcement, it’s important for the transit agency to be able to help the police to ensure the public is safe and resources are protected.
Rose said it’s such an important issue that she may try to get an opinion on the law from another state agency or elsewhere.
“If I have to, I will go to the state Legislature to get this cleared up,” she said.