INSIDE

District audit points out weaknesses

By Meg Olson

Washington state auditors found evidence of sloppy bookkeeping in their examination of Whatcom County Fire Protection District #5 financial transactions and policies in 2001, 2002 and 2003, which current district commissioners and managers say they would have fixed if they knew about it.

“District management personnel has changed considerably and the management changes of the past few years resulted in a gap in the current management’s knowledge,” the district wrote in response to the auditor’s report, issued June 10.

Two of three of the audit findings related to the district’s involvement in the founding of the Point Roberts Aydon Wellness Clinic. Specifically, auditors reported that the district “did not establish controls over the activities of the clinic when it gave decision making and general management authority to the clinic’s board.” That board is made up of two representatives from the three partners in the establishment of the clinic: the Point Roberts Pioneers citizens’ association, the Interfaith Clinic in Bellingham, and the fire district. However, auditors concluded the fire district alone was given responsibility for oversight of the program by accepting the federal grant that paid for the establishment of the clinic,

Auditors pointed to two specific irregularities in how clinic monies were handled.

First, patient fees from the clinic did not come through the fire district, which received grant funds and released them monthly to pay the clinic’s bills. Instead $73,705 in patient fees went into non-public accounts only accessible by two of the clinic board members. Checks were written spending $21,202 from July 2003 to March 2005, which the auditor considered “questioned costs.”

In their response to the state auditor district commissioners said that they believe agreements drafted when the clinic was started provided the controls and procedures necessary to meet requirements for oversight of the federal grant, but unfortunately those “were not properly monitored or followed.” Of the three commissioners now on the fire district board only one, Bill Meursing, was in office during the time of the audit period and he only served as commissioner in one of the three years examined.

“None of us were here when everything was put together,” said commissioner David Gellatly. “We just have to make sure it isn’t done again and we are.” At the June 8 fire district meeting current finance manager Suzanne Kinsey, who was not with the district during the audited period, said measures had been taken to address the auditor’s concerns about proper oversight of public funds.

The auditor also took issue with how improvements to the Benson Road firehall to build the clinic were paid for. The auditor felt an $18,000 rent payment from the Wellness Clinic to the district and $18,000 improvements to the Benson Road firehall were the same thing. “The district essentially paid rent to itself in the same amount as the improvements,” the auditor’s report stated, and improvements aren’t an allowable use of grant funds.

In their response the district defended the transaction, pointing out that the district and the clinic are separate entities, that a lease agreement between them is in place, and that the grant does allow for the funds to be used for rent.

The leasehold improvements also came under fire for failure to comply with bid and prevailing wage laws after a contractor was paid $44,299 for the improvements on a $16,636 contract that was not put through a competitive bidding process.

The district acknowledged that the initial contract to build a separating wall creating the clinic space was not awarded in compliance with bid requirements, but maintains that it was a separate contract through a $25,000 county grant that paid for interior improvements to the clinic. The auditor’s office will revisit the status of this finding in their next audit.

“I don’t think anyone tried to do anything untoward,” Gellatly said of the finding. “People were just scrambling to get the clinic together.”
Finally, the auditor’s report found that problems noted in a December 2003 special audit of North Whatcom Fire and Rescue Services (NWFRS) still existed, specifically that the fire district made “inadequately supported payments” to that agency. “All I can say for North Whatcom is we got out,” said Gellatly, who with Meursing voted to cut ties with NWFRS following the resignation of the rest of the district board and Gellatly’s appointment in December 2003.

Auditors reported that the tangle of finances they found in 2003 involving NWFRS and the three fire districts that partnered in its creation was still unresolved. As that agency has terminated both its administrator and finance manager, the state could not complete its audit.

They’ll be back.