Former employees receiving benefits were among some of the inconsistencies state auditors found on the city of Sunnyside's books for 2004.
During a two-hour exit interview with the city yesterday, auditors described a total of nine 2004 audit issues with Sunnyside, including two serious federal audit findings that will be posted on the state website.
One of the findings related to insufficient internal controls over the city's financial systems.
More specifically, the city in 2004 did not reconcile its utility billing system to the general ledger.
"This is the real issue," Jan Jutte, a deputy to the state auditor's office, told city officials and three council members present. "If doesn't take long for people to figure out there are no controls and that's when money can walk out the door."
Another internal control issue the state auditor's office found for 2004 were that four of the city's seven bank account reconciliations were not independently reviewed.
In one case, the main treasurer's office checking account, which showed activity of $12,657,000 for 2004, was not reconciled until August 2005.
The city's other finding was received for not submitting its 2004 annual report until Nov. 14, 2005, more than five months after the deadline.
In its comments, the state did take into account a transition in personnel with the hiring of City Manager Bob Stockwell in May 2004 and Finance Director Scott James in June 2005.
Stockwell noted there were problems with the way the city kept books before he arrived, pointing out that the city was keeping two sets of books.
And there were indeed troubles in 2004 with the utility books. "The city did issue a utility bill for $4 million but fortunately the person didn't pay it," Stockwell said.
"This had been going on for years and you never caught it in an audit, then in 2004 something changed," he told audit officials. He also took the auditors to task, noting if they had done a more thorough review before 2004 he would have been aware of the double books when he took the job with the city.
Susan Remer, an audit manager for the state auditor's office, said the 2004 audit of the city was more stringent because Sunnyside had changed to a new, tighter accounting system.
James said he had no problem with the city receiving more scrutiny, but reminded auditors that a previous city administration had spent more than $1 million on accounting software that was used incorrectly for the city's utility fund.
Stockwell and James also alluded to written responses to each of the auditor's issues, but did not make them available to audit officials or to the public.
An issued noted by auditors- which Stockwell felt should have been listed as a more stringent finding-was that two former Sunnyside employees continued receiving benefits in 2004 after they left city employment in 2003.
Former City Manager Dave Fonfara and former Public Works Director Gary Potter received a combined $5,209.20 in benefits in 2004 even though they no longer worked for the city.
Rather than the city immediately paying out accrued vacation and sick leave when the two left in 2003, Sunnyside allowed Fonfara and Potter to remain as city employees for the first two months of 2004.
Though Stockwell and James called for a harsher finding, Jutte said there was not much auditors could do, given city statutes only call for former employees to be given their compensation "as soon as practical" rather than immediately.
James said following Tuesday's audit meeting that the city would in the future address that statute. "There's an understanding at the city that you collect your benefits when you leave, but we need to make it official," he said.
While the city's 2004 books are put to rest, Jutte reminded Sunnyside that its financial report for 2005 is due May 30.
In addition, three of the nine items that auditors cited are still trouble spots for the city that need to be corrected for the next round of auditing later this year for 2005.
The first is that Sunnyside needs to comply with a revenue bonds earning requirement. Jutte said that issue should soon be resolved as the city has re-issued the bonds.
Though there are improvements, the second issue still haunting Sunnyside is that all cash receipts at the police department are not deposited within 24 hours. Jutte said the department has progressed to the point where about half of all cash receipts are deposited within 24 hours, but improvement is still needed.
The third item to be addressed also involves the police department, as Jutte noted the city still does not perform an annual inventory on $53,000 worth of "small and attractive assets," such as cell phones, radar detection equipment, computers, bulletproof vests and weapons.
The danger, she added, is that without a reliable inventory the items could be misplaced or removed without the department's knowledge.
Jutte said the three remaining issues could potentially be elevated to a federal finding if they are not addressed. Beyond that, she said, there's little else the state auditor can do.
"We are a reporting agency, not an enforcement authority," Jutte said. "If there's any action to be taken it would be by the citizens."