Camas puts plan in place to address state audit issues

In the wake of its first Washington State Audit finding in 35 years, the city of Camas is now in the throes of working to strengthen its finance department.

During a recent Camas City Council workshop, Camas City Administrator Lloyd Halverson and Finance Director Joan Durgin presented a work plan that includes making changes to elements of its cash reconciliation process, improving internal control procedures and reducing the workload of several key finance department employees. The estimated cost in 2012 of accomplishing these goals is $26,000.

“This is our effort to address and improve things to be sure we don’t have a subsequent finding to bring to you,” Halverson said.

On July 30, the Washington State Auditor’s Office released to the public the results of its 2011 audit of city finances, which found that when costs are shared between one city department and another, those actions were not being adequately documented.

The auditor’s report specifically pointed out that in 2011 “the city allocated $863,334 in general administration costs to its utility funds without documenting that amount was fair and equitable. Increased costs to city utilities may result in higher utility rates.”

Durgin said the city has processes in place for indirect cost allocation, but in the state auditor’s opinion it did not go far enough.

“They didn’t mind the methodology, but they had an issue with the lack of [documentation] support,” she said.

In the path forward presented earlier this month Paul Lewis, a financial and management consultant who has worked with the city on a number of projects, will be hired on a contract basis to restructure the city’s cost allocation plan. The proposed contract is for $7,475.

The city also plans to hire another consultant, Certified Public Accountant Teresa Johnson, to help with high level accounting tasks. Johnson previously worked with the city on developing its utility rate study. At a total cost of approximately $18,000, she is expected to work 6 to 7 hours a week in the finance department at least through next spring, when the need for the additional assistance will be re-evaluated, Durgin said.

Councilman Tim Hazen said the city should be cautious about making the decision to hire any permanent additional employees once the tasks that address the audit concerns are complete, new procedures are in place and some duties are re-assigned.

“In my experience in stuff like this, it is east to throw people at it but that’s not always the solution,” he said.

State auditors originally pointed out the cost allocation issue to the ctiy in the form of a management letter in 2010.

Durgin said some “tweaks” were made to the allocation of shared costs process, but it was not addressed further. She said her attentions were directed to other issues, a situation that was aggravated when an accountant position vacated due to retirement was not filled in the wake of budget cuts.

Halverson said the city is taking the effort to address the auditor’s criticism seriously.

“The point of this is to be sure we don’t have this discussion again next year.”