The city of Everett needs better policies for handling cash receipts at the Carl Gipson Senior Center and the Everpark Garage, a letter to city leaders from the State Auditor's Office said.
The city also needs to replenish one of its contingency funds used for self-insurance purposes, the letter said.
Susy Haugen, the city's finance manager and treasurer, said the city is taking steps already to fix the problems identified in the audit.
The cash handling problems at the senior center and garage are minor compared to the amount of cash the city handles.
The city's decentralized departments generated more than $98 million in revenues in 2013, $47 million of which came from utility billings.
The audit found the city's utility department and the golf course had adequate internal controls to safeguard public resources.
The garage reported $282,368 in cash receipts from 2013, and the senior center $64,100. No money is missing, but the auditors considered controls inadequate.
“We also need to be cognizant of the cost of mitigation versus the amount of money being protected,” Haugen said.
The garage was cited for not depositing cash receipts daily. The auditors found four separate deposits totalling $21,580 that were held from one to two weeks.
In addition, after-hours payments were not secured, with cash envelopes visible in the locked parking attendant stall, funds from monthly fees were held in an unsecured envelope for a month with no daily reconciliation, and up to three employees worked from the single cash register during one day.
The senior center was cited for not reconciling funds consistently and accurately, not documenting daily reconciliation of cashier boxes and receipts, and not documenting when cash is taken or returned from funds for dances.
In addition, the audit identified problems at the senior center had been called out in the previous year's audit as well. Those included not always issuing receipts for cash purposes, cash receipts in excess of $100 not being deposited daily, not following city policy limiting access to the safe to just two staff members, and not always locking the safe during business hours.
Haugen said that some of the challenges stem from the senior center's small staff and being open six days a week. Persistent problems might crop up as others are solved because the activities at the senior center might change from year to year.
“As they went along, different issues would come up, or with different programs they wanted to do, they didn't always look to internal controls when it comes to handling the money,” she said.
The city is taking steps to fix these issues. That includes ensuring the safe remains locked during the day and sending an armored car to collect deposits.
The city is working with the Downtown Everett Association, which manages the Everpark Garage, to put better practices into place.
The underfunded insurance fund is a reserve contingency fund used to cover periods when employee health claims exceed the amount the city has budgeted to cover claims during the year.
At the end of 2013, that contingency fund had $332,083, but should have about $1.77 million, the same amount as the main reserve fund, auditors said.
“It's a funding source during the bad years,” Haugen said. “We had just come off a couple of really bad years and had pretty much consumed the reserve.”
The city is about halfway through a three-year program to replenish that fund, she said.
Chris Winters: 425-374-4165 or firstname.lastname@example.org. Twitter: @Chris_At_Herald
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