Park District fixes audit problems
July 3, 2008 · Updated 4:13 PM
The director of the North Whidbey Park and Recreation District is working to fix two problems outlined in an audit report.
The state Auditors Office released the accountability audit on the district April 29. It covers the period from Jan. 1, 2003, through Dec 31, 2004.
The first finding, the most serious issue, was that the district did not have adequate internal controls over cash receipting and did not notify the State Auditors Office of possible misappropriations in a timely manner.
The reports states that district management detected the possible theft of funds from a cash register in May of 2004, but did not notify the Auditors Office or police until December of that year. It states that district management was unable to determine the amount that was stolen or who was responsible because of loss of records and weaknesses in internal controls.
Moreover, the report states that auditors were unable to perform an independent investigation because records had been lost or destroyed.
Director Craig Carlson said he discovered last summer a big discrepancy in the amount of cash in the cash register and the amount that should have been collected based on the number of people using the pool.
Yet Carlson said he couldnt prove anything because of the way the system is set up. He said there was no way to independently keep track of the number of people who used the pool so that the administration could compare it to the amount of money in the register.
Carlson said he didnt report the matter to the police or Auditors Office because he felt he didnt have enough evidence. Also, he didnt realize that he was supposed to report such matters to the Auditor.
Carlson pointed out that he was the one who brought up the issue with the Auditors Office in the first place.
Yet Fred Henninger, chairman of the districts board of commissioners, said he isnt satisfied with the explanation. He said the matter should have been reported right away. He said the board wasnt notified about it until two months after the Auditors Office found out.
Also, he questions why records were lost or destroyed.
Its a lot of money to keep track of. Revenues collected at the front counter were $217,000 and $279,000 for 2003 and 2004, respectively.
Carlson, however, said hes following the Auditors Office recommendations and installing a new system to keep track of money. He said hes looking into the point of sale management software thats used at the Fidalgo Pool in Anacortes.
Under this system, pool users can buy a small card either a punch-pass or an annual pass with the persons photo that can be scanned into a computer, keeping track of who uses the pool and when.
The other finding in the audit report was that the district did not maintain sufficient documentation to demonstrate compliance with state bid law.
The finding had to do with a $265,000 project in 2003 to install a new heating, ventilation and air conditioning system.
Specifically, auditors found the district did not obtain contractors approved Intent To Pay Pay Prevailing Wages; the district did not require the contractor to obtain and submit a performance bond as required; the district paid the contractor before verifying all required documents were complete.
The report states that the district paid the company for the performance bond and later learned that the bond was never obtained. The company refunded the money to the district.
Carlson explained that the oversight occurred while both the district and the company were going through transitions in management. Jim Shulock was director until April of 2003; Sally MacLaren-Meurer was director from May to July 2003; and Carlson started in August of 2003.
Henninger blames the problems on the districts attorney, whom Henninger claims was responsible for the documentation.
In addition, the Auditors Office issued a management letter. One issue mentioned in the letter is a board members reimbursement. The report states that the district paid a board member $1,852 without any receipt.
The letter goes on to say a board member should not participate in any financial transactions with the district.
Carlson said this issue sounds a lot more serious that it is. He explained that Commissioner Tom Johnson is a very big donor and makes a habit of paying for half the cost of district projects which he is involved with.
Usually, the district pays for a project, then Johnson write a check for half of the amount.
But in this case, Carlson said Johnson paid for a sound system for the pool building. He later asked the board of commissioners to reimburse him for half of the cost, which they did. Carlson said the issue was easily resolved. Johnson provided the auditors with the receipts.
He said hes still going to contribute, Carlson said, just not in that way.