Washington State Auditor s Office. Accountability Audit Report. Skamania County. Report Date March 18, Report No

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1 Accountability Audit Report Skamania County Report Date March 18, 2010 Report No Issue Date March 29, 2010

2 Washington State Auditor Brian Sonntag March 29, 2010 Board of Commissioners Skamania County Stevenson, Washington Report on Accountability We appreciate the opportunity to work in cooperation with your County to promote accountability, integrity and openness in government. The State Auditor s Office takes seriously our role to advocate for government accountability and transparency and to promote positive change. Please find attached our report on Skamania County s accountability and compliance with state laws and regulations and its own policies and procedures. Thank you for working with us to ensure the efficient and effective use of public resources. Sincerely, BRIAN SONNTAG, CGFM STATE AUDITOR Insurance Building, P.O. Box Olympia, Washington (360) TDD Relay (800) FAX (360)

3 Table of Contents Skamania County March 18, 2010 Audit Summary... 1 Related Reports... 2 Description of the County... 3 Schedule of Audit Findings and Responses... 5

4 Audit Summary Skamania County March 18, 2010 ABOUT THE AUDIT This report contains the results of our independent accountability audit of Skamania County for the period from January 1, 2008, through December 31, We evaluated internal controls and performed audit procedures on the activities of the County. We also determined whether the County complied with state laws and regulations and its own policies and procedures. In keeping with general auditing practices, we do not examine every transaction, activity or area. Instead, the areas examined were those representing the highest risk of noncompliance, misappropriation or misuse. The following areas were examined during this audit period: Disbursements/expenditures Contracts/agreements Payroll Benefits Restricted funds Open public meetings RESULTS In many areas, the County complied with state laws and regulations and its own policies and procedures. However, we identified a condition significant enough to report as a finding: The former Skamania County Auditor violated state law and County policy by engaging in conduct that resulted in questionable uses of public funds. 1

5 Related Reports Skamania County March 18, 2010 FINANCIAL Our opinion on the County s financial statements and compliance with federal grant program requirements is provided in a separate report, which includes the County s financial statements. FEDERAL GRANT PROGRAMS We evaluated internal controls and tested compliance with the federal program requirements, as applicable, for the County s major federal programs, which are listed in the Federal Summary section of the financial statement and single audit report. 2

6 Description of the County Skamania County March 18, 2010 ABOUT THE COUNTY Skamania County serves approximately 10,300 citizens. It is governed by an elected, three-member Board of Commissioners. For fiscal year 2009, the County operated on a budget of over $50 million. Its 300 employees provide an array of services including general government, economic development, solid waste disposal, cultural and recreational services, senior services, building and planning, law enforcement, community health and transportation. ELECTED OFFICIALS These officials served during the audit period: Board of Commissioners: District 1 District 2 District 3 Assessor County Clerk Prosecuting Attorney Treasurer Sheriff District Court Judge Superior Court Judge Auditor Paul Pearce Jim Richardson Jamie Tolfree Gabe Spencer Sharon Vance Peter Banks Cherie Flood Dave Brown Ronald H. Reynier E. Thompson Reynolds J. Michael Garvison Note: J. Michael Garvison resigned and was replaced by Tim Todd in APPOINTED OFFICIALS County Engineer Tim Homann COUNTY CONTACT INFORMATION Address: Web site: Skamania County 240 NW Vancouver Ave P.O.Box 790 Stevenson, WA

7 AUDIT HISTORY We audit the County every two years for accountability purposes. In the past five accountability audits we have reported one finding. The 2000 audit contained an internal control finding involving cash receipting. This finding has been resolved. 4

8 Schedule of Audit Findings and Responses Skamania County March 18, The former Skamania County Auditor violated state law and County policy by engaging in conduct that resulted in questionable uses of public funds. Background County auditors are responsible for examining all county expenses to ensure they are for a valid purpose, benefit the county, are allowable by county policy and state law and are supported by documentation. In order to provide oversight of expenses incurred by the county auditor, all claims of the county auditor are to be audited and allowed by the County Board of Commissioners. In 2008 and 2009, the Skamania County Auditor s Office processed its own payments totalling $743,441 and $684,032, respectively. During 2009, citizens contacted our Office with concerns regarding the expenses and actions of the Skamania County Auditor. In addition, the County Board of Commissioners issued a letter to us dated October 20, 2009, requesting an audit of the County Auditor expenses. Shortly after we received the concerns and letter, the County Auditor resigned on November 8, 2009, to take a position in another state. We reviewed these concerns during our regular audit of the County. Our review focused on the former County Auditor s travel expenses, equipment purchases and other uses of County funds. We found the concerns regarding former County Auditor expenses to be valid and consistent with our recommendations from the previous accountability audit. We reviewed payments from January 2005 through November We were unable to review this individual s expenses for 2004 because records had been destroyed, in violation of a state law requiring payment vouchers to be retained for six years. The former County Auditor s expenses were paid directly with County warrants, County credit cards and through travel voucher reimbursements. The majority of expenses were incurred through travel voucher reimbursements totaling $116, Description of Condition The former County Auditor made questionable expenditures of public funds that violated state law and County policy. In addition, the former County Auditor circumvented state law when he approved his own expenditures. The County is unable to demonstrate, and other County officials question, whether these expenditures provided a benefit to the County. 5

9 The following table summarizes the issues found: Description Questionable Expenses Travel Out of state travel $ 20, Car allowances $ 13, Gorge area mileage $ 3, Excessive Mileage $ 1, Jeep expenses $ 13, Other Social events $ 1, Master's Degree $ 15, Equipment purchases $ 16, Total $ 87, Out-Of-State Travel We found the former County Auditor took 23 trips out of state at a cost of about $38,850 from June 2005 through September The former County Auditor traveled to Washington D.C., Florida, California, Nevada, Arizona, Texas, Colorado, Massachusetts and Canada. The former County Auditor appeared to have traveled at his sole discretion. We did not find documentation to show these trips were approved in advance by any County official. We were unable to determine the benefit to Skamania County for 13 of those trips totaling $20, Car Allowance The former County Auditor received a $450 monthly car allowance from May 2007 through October 2009, except in October He inappropriately received two $450 allowances in each of May 2007 and May County policy provides this allowance for officials who are not assigned a County vehicle. Although the former County Auditor was not officially assigned a County vehicle, he had a County-owned vehicle to use at his discretion. County Auditor s Office employees stated this vehicle was used only a few times by someone other than the former County Auditor, who sometimes kept it at his personal residence. When the vehicle was returned to the County just prior to the former County Auditor s resignation, its odometer reading showed it had been driven 37,440 miles since being purchased by the County Auditor s Office for $3,288 in October Columbia River Gorge-Area Mileage County policy prohibits officials who receive a car allowance from claiming mileage within a defined area around the Columbia River Gorge. We estimate the former County Auditor claimed mileage of 7,164 within this restricted area, resulting in overpayments of approximately $3,

10 Excessive Mileage We recalculated the miles claimed on the former County Auditor s travel vouchers and found he over claimed miles on 27 of his travel vouchers from May 2007 through October Our calculations estimate the excess miles totaled 2,898, resulting in overpayments of approximately $1, Vehicle Expenses Over 32 months, the former County Auditor spent $13, in County funds on parts and repairs for the aforementioned vehicle. These included some extraordinary expenses such as a 4-inch lift kit, transmission rebuild, manifolds, radiator, shocks and weather stripping. The work was primarily performed by a mechanic shop in Vancouver, Washington, 39 miles from the Skamania County Courthouse. We found this investment of County resources in a vehicle that had 137,000 miles on it upon purchase to be a questionable use of public funds, particularly in light of the former County Auditor also receiving a car allowance and mileage reimbursements. Social Events The former County Auditor claimed meal and mileage expenses of $1, for attending 25 meetings not directly related to County business. The meetings were predominantly Young Professionals of Vancouver networking meetings. County policy explicitly prohibits expense reimbursements for personal social events. Master s Degree The County paid at least $15, for tuition, textbooks and travel for the former County Auditor to receive a master s degree in business administration. It appears the former County Auditor acted at his sole discretion to acquire a master s degree at the public s expense. We found no one approved using County money to pay these expenses. County policy requires all educational courses and training to be for a Countyrelated purpose. Equipment Purchases The County Auditor s Office purchased at least $16, in equipment from December 2006 through June More than $8,600 of the purchases was reimbursed to the former County Auditor through travel vouchers. The remaining purchases were made with a Skamania County credit card. Purchases included four laptop computers, two printers, three cell phones, two hand s free devices, a global positioning system, an LCD television, a camcorder and several electronic equipment accessories. The Deputy Auditor stated the former County Auditor paid $2, to the County near the time of his resignation for equipment he decided to retain. The Board of Commissioners had not approved this payment in exchange for County equipment. We found no documentation for this arrangement or a list of the items he retained. Most of the equipment purchased by the former County Auditor could not be located during our investigation, including three laptops, two cell phones, the hand s free devices, a digital voice recorder and other accessories. This equipment had not been surplused and the 7

11 County should not have allowed the former County Auditor to keep it. Further, any electronic files on the laptops are public records that must remain in the County s possession and may contain sensitive information the County must keep secure. Cause of Condition The former County Auditor circumvented controls that prevent the use of public funds and County equipment for private purposes and the destruction of public records. The actions of the former County Auditor were not consistent with his official statutory duties. During interviews, County Auditor s Office employees stated they had been concerned about retaliation should they not follow the former County Auditor s direction. The employees chose not to question the actions of the former County Auditor. County personnel policy provides a means and direction for employees to register concerns regarding possible misconduct of other employees. However, the policy does not address a situation in which an employee has concerns about an elected official violating law, rules, policies, procedures or standards of conduct. Further, County Commissioners only monitored the expenses of the Auditor s Office as a whole. The Board did not adequately review individual expenses of the County Auditor s Office. State law requires commissioners to audit and allow all claims made by the county auditor. We found the Deputy Auditor reviewed and approved most claims by the former County Auditor. Effect of Condition The County Auditor s Office did not meet the public s expectations for government accountability and transparency. Actions taken by the County Auditor resulted in an examination by our Office into numerous citizen concerns. The public benefit was not established for at least $87, in expenditures of County funds. County-owned equipment was lost and any sensitive data contained on them may be unsecured. In addition, the premature destruction of County records limited our ability to fully investigate the expenses incurred by the former County Auditor. Recommendation We recommend the County: Improve internal controls over disbursements of public funds, in particular expenses of the County Auditor s Office. Provide ethics training to all officials and employees. Develop a policy on how County employees can communicate concerns regarding elected officials. Implement controls that ensure adherence to the records retention schedules Attempt to recover the lost equipment retained by the former County Auditor, some of which may contain public records and sensitive information. 8

12 Consult with legal counsel regarding its options to recover the questionable use of public funds. County s Response Skamania County wishes to acknowledge with appreciation the hard work and dedication of the State Auditor s Office Staff in this critical period. The in-depth audit of the previous County Auditor s expenses requested by several citizens, as well as the Board of County Commissioners (BOCC), has revealed a squandering of public resources by a single elected official. The County wishes to acknowledge the recommendations and further indicate that while much has been done, we will continue to develop systems to ensure that this does not occur again: The BOCC acknowledges its failure to aggressively monitor the previous Auditors expenditures. The current Auditor has indicated understanding and agreement that he will present all Auditor expenditures to the BOCC for approval and will have his expense reimbursements approved by the BOCC Chair; all of which shall be incorporated into Policy. The BOCC resolves to pursue every legal authority to recover the $87,380 of public money squandered by the previous auditor. One of the BOCC provisos in the 2010 budget requires that exceeding any travel budget, by any office or department, must be immediately reported to the BOCC. A complete rewrite of the personnel policy manual is in the draft review stage at this time and will include policies covering all of the areas as recommended by the audit. The BOCC resolves to create a travel policy for all elected officials requiring notification of certain travel prior to its occurrence. The BOCC will take every reasonable step to fully recover all County property from the former Auditor. The County strives to manage its business in the most efficient and effective manner for its citizens. The previous Auditor violated the public trust in many ways, not the least of which was the misappropriation of the aforementioned monies. This audit and our response will begin the work to restore the public s confidence in their government. Auditor s Remarks We appreciate the steps the County is taking to resolve these issues. We will review these conditions during our next audit. 9

13 Applicable Laws and Regulations Revised Code of Washington (RCW) , Oath of office, states: Every person elected to county office shall before he or she enters upon the duties of his or her office take and subscribe an oath or affirmation that he or she will faithfully and impartially discharge the duties of his or her office to the best of his or her ability. This oath, or affirmation, shall be administered and certified by an officer authorized to administer oaths, without charge therefor. RCW states general control requirements: The accounts shall show the receipt, use and disposition of all public property, and the income, if any, derived there from; all sources of public income, and the amounts due and received from each source; all receipts vouchers, and other documents kept, or required to be kept, necessary to isolate and prove the validity of every transaction; all statements and reports made or required to be made, for the internal administration of the office to which they pertain; and all reports published or required to be published, for the information of the people regarding any and all details for the financial administration of public affairs. RCW , Duty to audit claims against county, states: The county auditor shall audit all claims, demands, and accounts against the county which by law are chargeable to the county, except such cost or fee bills as are by law to be examined or approved by some other judicial tribunal or officer. Such claims as it is his duty to audit shall be presented to the board of county commissioners for their examination and allowance. RCW , Claims of auditor, states: All claims of the county auditor against the county for services shall be audited and allowed by the board of county commissioners as other claims are audited and allowed. Such warrants shall in all respects be audited, approved, issued, numbered, registered, and paid the same as any other county warrant. State of Washington, Local Government Common Records Retention Schedule, Item No , Disposition Authority No. GS50-03A-30, in accordance with RCW , states: Vouchers all invoices for all funds and purposes with attached supporting documentation includes travel vouchers/ authorizations to be retained for a minimum period of 6 years or to destroy when obsolete or superseded. 10

14 Budgeting, Accounting and Reporting System (BARS) Manual, issued by the State Auditor s Office, Volume 1, Part 3, Chapter 1, Page 7, states in part: Internal control systems are to reasonably ensure that the following objectives are achieved: Expenditures and commitments comply with applicable law. Assets are safeguarded against waste, loss, unauthorized use, and misappropriation. Transactions are recorded properly so that reliable financial and statistical reports can be prepared and accountability for assets is maintained. Skamania County Board of County Commissioners, Resolution , Vehicle Use and Maintenance Policy, Section 3. Use of County Vehicles, states in part: D. County vehicles will be stored on County proprety. Exception: 3. Employees who are not assigned a 24-hour per day vehicle, may park a County vehicle at residence for a short duration if authorized by the Department Head or Elected Official to efficiently conduct a County task. Skamania County Board of County Commissioners, Resolution , County Officials Policy for Travel Reimbursement, effective May 1, 2007, states in part: NOW THEREFORE BE IT RESOLVED that all elected officials, (excepting the District Court Judge and Superior Court Judge) are to be reimbursed as follows: 1) A vehicle allowance of $ per month shall be paid to elected officials for the use of their own vehicles. The monthly allowance shall be deemed as full reimbursement for all miles traveled on County business within the whole of Skamania County as well as within the Columbia Gorge Scenic Area defined as The Dalles Dam to the east and I-5 to the West. 2) For all other travel reimbursement, the travel policy in Section 20 of the Skamania County Personnel Policy adopted by Resolution , , or as amended shall be followed. 3) Elected officials declining said vehicle allowance will not be authorized any recompense outside that authorized under paragraph 2 above. 11

15 BE IT FURTHER RESOLVED that this resolution shall take effect on May 1, 2007, shall repeal Resolution , and shall repeal or modify any other resolution or policy inconsistent herewith. Skamania County Board of County Commissioners, Resolution , County Officials Policy for Travel Reimbursement, effective January 1, 2008, states in part: NOW THEREFORE BE IT RESOLVED that all county officials (department heads), (excepting those with assigned vehicles) are to be reimbursed as follows: 1) A vehicle allowance of $ per month shall be paid to county officials (department heads) for the use of their own vehicles. The monthly allowance shall be deemed as full reimbursement for all miles traveled on County business within the whole of Skamania County as well as within the Columbia Gorge Scenic Area defined as The Dalles Dam to the east and I-5 to the West. 2) For all other travel reimbursement, the travel policy in Section 20 of the Skamania County Personnel Policy adopted by Resolution , , or as amended shall be followed. BE IT FURTHER RESOLVED that this resolution shall take effect on January 1, 2008, shall repeal Resolution , and shall repeal or modify any other resolution or policy inconsistent herewith. Skamania County Board of County Commissioners, Resolution , Skamania County Personnel Policy, excerpts from Chapter 20 Travel Policy, states in part: Registration Costs, Elected Official or Department Head may reimburse employee for any educational courses taken, including seminars, classes, trainings, etc. if the Elected Official or Department Head deems that the training will benefit the County and that it pertains to a county-related purpose if the Elected Official or Department Head has the appropriate budget authority already established for this purpose. Transportation Costs, Department Head or Elected Official shall reimburse person the actual and necessary costs of transportation to conduct official County business as follows: The method of transportation and route most advantageous to the County, considering the cost of transportation, other travel expenses and salary When authorizing the use of a private automobile

16 Mileage will not be paid for that portion of a trip, which would be part of the normal commute. Per Diem Meals & Incidental Expenses, Department Head or Elected Official may pay directly or reimburse employees, elected officials, members of Boards and Commissions and authorized volunteers in non-travel status for meals... if all the following conditions apply: Business event takes place in a clear business setting Expenses directly relate to County business Meal negates the disruption of the business meeting Request for payment or reimbursement states purpose of meeting. Per Diem Meals & Incidental Expenses, Department Head or Elected Official may not pay for meals or incidental expenses for persons not covered by this travel policy, except as allowed for refreshments. Non Reimburseable Meal & Refreshment Costs, , defines when a person s meal costs will not be reimbursed Incurred for recreational or social events such as office, going away, and retirement parties, or other personalized social events. Non Reimburseable Expenses, 20.10, defines non reimburseable expenses Travel and miscellaneous expenses not authorized under this policy Miscellaneous travel expenses not directly related to conduct official County business and excessive or unnecessary expenses Expenses considered personal including, but not limited to: Excess costs and additional travel expenses as a result of taking an indirect route or a delayed return trip for personal preference or convenience

17 ABOUT THE STATE AUDITOR'S OFFICE The State Auditor's Office is established in the state's Constitution and is part of the executive branch of state government. The State Auditor is elected by the citizens of Washington and serves four-year terms. Our mission is to work in cooperation with our audit clients and citizens as an advocate for government accountability. As an elected agency, the State Auditor's Office has the independence necessary to objectively perform audits and investigations. Our audits are designed to comply with professional standards as well as to satisfy the requirements of federal, state, and local laws. The State Auditor's Office employees are located around the state to deliver our services effectively and efficiently. Our audits look at financial information and compliance with state, federal and local laws on the part of all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits of state agencies and local governments and fraud, whistleblower and citizen hotline investigations. The results of our work are widely distributed through a variety of reports, which are available on our Web site and through our free, electronic subscription service. We continue to refine our reporting efforts to ensure the results of our audits are useful and understandable. We take our role as partners in accountability seriously. We provide training and technical assistance to governments and have an extensive quality assurance program. State Auditor Brian Sonntag, CGFM Chief of Staff Ted Rutt Deputy Chief of Staff Doug Cochran Chief Policy Advisor Jerry Pugnetti Director of Audit Chuck Pfeil, CPA Director of Special Investigations Jim Brittain, CPA Director for Legal Affairs Jan Jutte, CPA, CGFM Director of Quality Assurance Ivan Dansereau Local Government Liaison Mike Murphy Communications Director Mindy Chambers Public Records Officer Mary Leider Main number (360) Toll-free Citizen Hotline (866) Web Site Subscription Service (SAO FACTS.DOC - Rev. 06/09)