State audit of Darrington reveals lack of oversight in 7 areas

DARRINGTON — There are problems with how the town’s money is managed and how its information is tracked, according to a state audit released last week.

Town operations lack enough oversight to protect public resources in seven areas, according to the audit. There are problems with: receiving cash; billing for utilities; handling donations; managing vendors; overseeing payroll; documenting state grants; and tracking city-owned items.

The auditor concluded that the causes of the problems are turnover in town staff, lack of training for employees and the chaos of the Oso mudslide in 2014, which killed 43 people and temporarily cut Darrington off from the rest of the county.

Darrington has seven employees, four of them full-time, and an annual budget of $2.5 million.

City leaders have failed to set new policies for tracking money or to train staff on existing ones, the audit found.

The longtime clerk and deputy clerk retired in 2013. Replacements hired in early 2014 left a year later. A new deputy clerk was hired in March and a clerk-treasurer in August. They now are training extensively on town rules and practices, clerk-treasurer Dianne Allen said.

The auditor recommended that Darrington officials:

better manage and document donations

keep records for vendors, grants and employee leave and pay schedules

separate cash handling duties

have independent reviews of receipting, utility billing and payroll

track city-owned property that is “determined to be small and attractive,” such as laptops or printers.

There is no evidence money has been misused, said Thomas Shapley, spokesman for the auditor’s office. But there are concerns that could happen if things don’t change, he said.

Darrington doesn’t have enough separation of duties for handling money. The deputy clerk and clerk-treasurer both have been responsible for receiving and recording payments and managing cash boxes. Darrington also lacks a system to track vendors for services and purchases.

Like vendor information, payroll documents have not been maintained. One employee’s balance of vacation hours reached more than double the city-mandated limit of 240 hours and staff haven’t kept documents showing approved pay schedules.

Officials also failed to update water rates in the town’s billing system. Though the Town Council in June 2013 voted to raise rates, that change never was made to the bills. Customers have been paying a base rate of $25 when they should be paying $28, resulting in about $11,000 in lost revenue each year, according to the audit.

The council recently reviewed the rates and a $28 base charge will start in January, Allen said.

Auditors also looked at the two largest state grants received in 2014: $673,977 for transportation and $122,500 for street projects. The town didn’t keep documents showing whether those grants were used in a way that complies with state bidding requirements.

The town had a similar problem with donations. Darrington received $50,000 from United Way and the Association of Washington Cities after the Oso mudslide. Staff couldn’t produce documents tracking the acceptance and use of those dollars.

However, the auditor was able to confirm through the donors and account information on the checks that the money was deposited into the town’s bank account.

Aside from the loss of $11,000 a year from utility bills, the auditor wasn’t able to determine how much Darrington’s management concerns may have cost.

In a written response, town officials promised to fix the problems. They plan to separate cash management duties so more than one employee is involved in the process. They’ll record and keep information for donations, grants, payroll and vendors. Tagging small items and having an independent review of town processes also are on the to-do list.

Officials plan to hire a file clerk to make sure town records are kept, Allen said.

Audits of city operations in 2011 and 2012 found that cash handling duties should be separated, loans between city funds should have payment plans and equipment records should be kept for machinery purchased with federal money.

The cash handling problems remain, equipment records have been partially updated and interfund loan issues have been fixed.

The auditor plans to follow up on the 2013-14 problems during the next audit.

Kari Bray: 425-339-3439; kbray@heraldnet.com.

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