OLYMPIA – A week ago state auditors conducted an exit conference with the Sunnyside City Council and city staff, bringing to light numerous conditions that were significant enough to report as five official findings from the fiscal year 2012.
Earlier this week the Washington State Auditor’s Office released its official report, which provides even more detailed information on the financial problems the city of Sunnyside currently face.
Finding No. 1 – The city does not have adequate oversight of payroll operations to safeguard public resources
Auditors note that despite past audits when multiple recommendations were made to the city council and staff on strengthening internal controls over payroll, continuing significant control weaknesses still exist.
Specifically, no one is reviewing the payroll clerk’s submission of benefit information and payments to each vendor to ensure that information is submitted correctly or timely.
Auditors also say timesheets for some police department employees include “work differential” time, even though the city does not provide any guidance on how this work differential time is supposed to be recorded or how it is supposed to be reported in the payroll system. As a result, say auditors, there is no way of ensuring all employees are charging this time appropriately.
Auditors are concerned, too, that city staff is not monitoring vacation or sick leave balances to ensure those leaves from work are not exceeding allowable maximums each year.
Also noted by auditors is that the city does not have a policy concerning several employees who receive a cell phone allowance each month, and that the city does not always retain documentation supporting who is approved to receive that allowance.
Finding No. 2 – The city does not have adequate oversight of disbursements to safeguard public resources
In paying out approximately $7.3 million to vendors each year, auditors say the city has not established overall policies, procedures and controls designed to protect public resources from misuse, loss or misappropriation.
Auditors noted that there is no policy regarding the use of “quick checks,” printed and mailed prior to city council approval. Also, the city frequently gives these checks to the individuals requesting them, instead of mailing them directly to the vendor. In 2012, 127 such transactions occurred, for a total amount of $1,307,250.
Also of concern to auditors is that department supervisors do not always approve departmental purchases, and employees do not have to get pre-approval for making purchases on open accounts.
In addition, there is not an adequate review of vendor payments to ensure they are properly supported, paid accurately or allocated to the appropriate departments.
Finding No. 3 – The city of Sunnyside does not have adequate support for its allocation of shared costs to restricted funds
Auditors, citing that the city has a responsibility to adopt a fair and equitable method of distributing shared costs among departments and funds and to document the benefit received when applying these charges, said the city could not provide documentation to support the allocation of costs for central service functions to restricted funds.
Auditors also note that the city does not compare estimated costs to actual expenditures to determine reasonableness of the allocations; and that the city does not have written policies or procedures regarding cost allocations.
Finding No. 4 – The city of Sunnyside lacks adequate internal controls to ensure utility bills and adjustments are accurate and supported, and delinquent accounts are actively pursued
Of primary concern to Washington state auditors is that the city does not have policies or procedures over the utility billing or cash receipting systems. Auditors note the city does not monitor the collection of utility payments and the posting of adjustments to receipts, which would detect or prevent misappropriation.
Auditors also shared that no one reviews the utility activity on a regular basis, and that the supervisor reviews the final billing report in total instead of by individual account. No one, say auditors, verifies that the accounts were billed correctly or that accounts were charged the appropriate rate.
The city, too, did not perform an independent review of the utility bill adjustments that were made in 2012, which totaled $55,873. Auditors noted that 61 late fee adjustments did not appear reasonable.
Auditors also say the city does not have a process for ensuring that all utility accounts are billed on a monthly basis.
Also of concern, say auditors, is that the utility clerk and cashiers made $92,109 worth of adjustments through the receipting system in 2012. They say the city did no independent review of those adjustments, and that support documentation wasn’t always retained to explain those adjustments.
Also, the city does not actively pursue delinquent accounts after services have been turned off. By year’s end in 2012, those monies owed to the city totaled $79,600.
Finding No. 5 – The city does not have adequate oversight over city pool activities to safeguard public resources.
Auditors say the city does not have policies or internal controls in place to monitor pool activities to ensure all revenues earned at the pool are properly receipted and deposited.
The weaknesses, say auditors, include multiple cashiers working with the same cash register; voids and adjustments on the register not always being approved by a supervisor; and not all monies collected being receipted through the cash register.