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<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Robert Frank, City Editor frank@heraldnet.com   Published: Saturday, August 23, 2008 State dings Lake Stevens Fire District The district was cited for breaking financial reporting rules. By Bill Sheets Herald Writer LAKE STEVENS -- A state agency has cited the Lake Stevens Fire District for numerous violations of financial reporting rules. A report by the state Auditor's Office rattled off a lengthy list of failures by the district in 2005 and 2006 to review and submit reports to the state in the time and manner required by law. The report, dated Aug. 18, totals eight pages, with responses from the district mixed in. Fire Chief Gary Faucett said some of the problems occurred because of an underperforming employee who has since been terminated. Some of the other violations, he said, happened as the district was scrambling to get up to speed with new state rules for financial reporting, for which the state provides no training, the chief said. "I guess what concerns me the most is, 'Here's the game, you figure out the rules,'" Faucett said. "We clearly now know what the rules are." The new rules involve how expenses should be organized as they are reported to the state. The bad report card carries no penalty, said Mindy Chambers, a spokeswoman for the Auditor's Office. Still, reporting errors deprive the public of important information and "increase the risk that significant mistakes could be made or that a fraud could occur and go undetected by the district," the auditor's report said. Chambers gave the district credit for its response to the report. "I have every reason to believe here that they're aware of the situation that caused this and they're responding in a good way," she said. Violations listed include: For the 2006 reporting year, the district did not submit its financial reports until October 2007, five months after the required submittal date. The district's financial statements did not report $54,482 in cash held in separate bank accounts. Payroll expenditures of $1.6 million were incorrectly reported as non-operating expenses. The amount represents 44.6 percent of the district's operating expenditures for 2006. Two transfers between funds totaling $9,205 occurred during fiscal year 2005 that were unknown to district management. The report said the problems occurred because district employees didn't know the rules and didn't know how to prepare reports for the state to review. The district also didn't require money transfers to be reviewed by anyone other than the person who entered them into the accounting system, and did not have a system in place to reconcile the statements with accounting records. One improper fund transfer was done by the previous employee, Faucett said. That employee was dismissed in April 2007, partly for the transfer and partly for other performance issues, the chief said. "We hired a bank manager with 15 years of experience," he said. "I want to assure the public out there that we have an expert." The transfers totaling $9,205 were county errors -- the district is a county fire district and has money in county bank accounts, Faucett said. An attempt was made to correct them but it did not get done before the reports had to be submitted, he said. All fund transfers are now reviewed by a deputy chief and all account balances are presented at each meeting of the board of commissioners, Faucett said. After the new employee came on board, she worked hard to try to get up to speed with the new reporting rules, but it took time, Faucett said. District officials, knowing they would be late with the reports, called the state, the chief said. "They said do the best you can and turn it in as soon as you can," he said. "They said keep us abreast of it as you go along. The state really misled us that we had some time." Chambers said it's not necessarily up to the Auditor's Office to let a jurisdiction know it could be in violation of the rules. It's also not the auditor's job to provide training, she said. "Our responsibility isn't really to do their financial statements for them," she said. Faucett added that the Auditor's Office could have let the district know it was not complying with the new rules after 2005, but didn't, and let the district continue to do it the wrong way in 2006. "That's just unacceptable to me," the chief said. Regarding this point, Chambers said, "I think the best thing to do is move forward and get this fixed. And I think they're doing that." Other smaller jurisdictions have struggled with the new reporting rules, Chambers said. "This is not an uncommon finding. They're not alone," she said. "We've had a lot of these. It's really their job to do that and get them to us in a way that's accurate and easy to audit." Reporter Bill Sheets: 425-339-3439 or sheets@heraldnet.com.

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