Friday, November 30, 2012

Audit: City failed to enforce policies

Document says credit cards, time sheets were misused


By BRENNAN REGO
Express Staff Writer

Willich, shown above in his office during his mayoral tenure, was sloppy in its record keeping and failed to enforce some city policies. Express file photo

    A forensic audit of the city of Sun Valley’s finances during 2009 through 2011 found numerous failures to follow written city policy in keeping purchase records, approving expenditures, allowing personal use of city vehicles, adhering to work schedules and setting salaries.
    A summary report of the forensic audit’s findings was released by the Blaine County Prosecutor’s Office to the Idaho Mountain Express this week after the newspaper filed a public records request.
    The audit, commissioned in April by the current administration of Mayor DeWayne Briscoe, resulted in the discovery of several instances of misused public funds, including just under $23,500 of “inappropriate charges” on a single credit card issued to the Fire Department.
    Findings from the investigation allege that the Fire Department credit card was used to pay for things such as special footwear for the fire chief and his son, and part of the cost of refurbishing a snowmobile belonging to the chief’s family. The chief told investigators that some non-customary purchases were authorized by then-Mayor Wayne Willich.
    The accounting firm that conducted the audit was the Seattle office of Newport Beach, Calif.,-based accounting firm Hagen, Streiff, Newton & Oshiro or HSNO. HSNO was hired by Boise-based law firm Moffatt, Thomas, Barrett, Rock & Fields, which Briscoe said Thursday the city retained to oversee the audit as a “third party” to eliminate any direct interaction between the city and the auditors that might reduce the credibility of the investigation’s findings.
    “Based on the documents they were requesting, we were able to initiate several changes to improve the administration of the city before the City Council received the report on Aug. 24,” Briscoe said.
    The summary report includes the following findings, conclusions and recommendations:
( Conclusion: “Based on our review of the documentation process for City of Sun Valley expenditures, the process in effect during the years 2009 through 2011 was not always followed, which resulted in inconsistent compliance with internal controls over expenditures. Additionally, during the course of the investigation we discovered that certain individuals responsible for reviewing and approving expenditures at the department level refused to sign off on the yellow sheets [expense reports] because they did not believe certain expenditures were appropriate or related to City of Sun Valley business. Notwithstanding, those expenditures were processed and approved for payment without sign-off by the department head or department manager.”
    Briscoe, who was then council president, said, “The bills had already been paid by the time the council was presented the yellow sheets. The yellow sheets did not provide a detailed report of the expenses and the council members wanted more information on what the city was paying, but it was not provided by [Willich’s] administration.”
    Briscoe said the council members began to refuse to sign the yellow sheets, but the bills continued to be paid.
( Recommendation: “The City should not allow payment for any expenditure prior to the completion of the review process. Thus, the city should suspend its practice of allowing its bank to pay off its credit card balance before the review process and suspend its practice of allowing some of its invoices to be automatically paid with the City credit card, unless the expenditures are preapproved by resolution of the Council.”
    Briscoe said the city has already tightened up its review of expenses before they are paid.
    “In January, the City Council suggested the establishment of a finance committee comprised of two council members serving rotating, three-month terms to review and preapprove every payment the city makes before the City Council makes the final approval,” he said. “I approved of the idea and the committee was established in April.”
( Finding: “To establish camaraderie amongst the firefighters, on-call EMT firefighters were encouraged to hang around the fire department, leading to some confusion as to what was and what was not compensable time as on-call EMT firefighter. For instance, we saw many firefighters requesting compensation for barbeques, and in other instances requesting compensation for seven hours for what appeared to be simple tasks such as cleaning the Fire Chief’s office.”
( Finding: “Some on-call EMT firefighters consistently recorded more hours than others for attendance at the same event, such as an EMT class or a backcountry-training course.”
( Finding: “Some entries on the time cards lacked dates [or] a description of the activity performed by the firefighter, were illegible, and in several instances we were not able to find time cards for some of the extra hours reported on the single-page summary sheets submitted to the Finance Manager/Treasurer.”
    The previous two findings were revealed to refer to former Fire Chief Jeff Carnes’ son Nick Carnes in a Nov. 21 letter from county Prosecutor Jim Thomas to Briscoe in which Thomas explains his reasons for not filing criminal charges against then-City Administrator Sharon Hammer, Jeff Carnes or Nick Carnes. One reason listed by Thomas is a lack of a sufficient paper trail to construct an accurate timeline of events.
( Recommendation: “The City should clearly define what are compensable tasks by an on-call EMT firefighter. … Family members should not be allowed to review and approve the hourly time sheets submitted by another family member.”
    A new personnel policy for the city’s non-full-time firefighters has been drafted, but has not yet been approved by the City Council. The council is in the process of reviewing the new policy and receiving feedback on the policy from the firefighters it would affect. The council is scheduled to discuss the policy at a meeting on Thursday, Dec. 6, and is expected to adopt the policy shortly thereafter. Briscoe said the new policy takes HSNO’s recommendations into account.
( Finding: “There was a severe lack of control with respect to credit card usage in the fire department. Credit card purchases were allowed in some instances without approval or documentation. Our investigation ultimately revealed $23,494 in inappropriate charges on the credit card issued to the fire department.”
    The audit also states that “evidence of suspect fuel-ups within a short period of time on the one fuel card, coupled with an almost 50 percent decline in gallons purchased on that same card in 2012 as compared to 2011 after that fuel card was assigned to a different user, is highly suggestive of inappropriate fuel purchases on that City-owned fuel card.”
( Recommendation: “We have reviewed the City’s revised procedures for approving charges on City credit cards that were implemented in 2012. We believe that the new procedures are adequate, but should also address the situation of a review by a family member, such that any charges on a City credit card by a department head’s family member should be required to be pre-authorized by the City’s Finance Manager/Treasurer or some independent person other than the department head who is a family member.”
    Briscoe said the city’s new personnel policy (for all employees, not just non-full-time firefighters) includes much more stringent limitations on nepotism and purchases made with city credit cards.
    “The new policy leaves nothing to interpretation,” he said.
Brennan Rego:brego@mtexpress.com


Read documents online
To read the report on the forensic audit, as well as related reports from the Idaho Attorney General’s Office and the Blaine County Prosecuting Attorney’s Office, go to www.mtexpress.com and look for “Extras” on the left side of the page.


 




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