Mukilteo accounts called sloppy

Published 10:28 pm Monday, October 20, 2008

MUKILTEO — In short, the books in this city’s government were a mess three years ago.

The state Auditor’s Office on Monday listed 15 different instances of sloppy, patchwork or nonexistent accounting and inventory practices by Mukilteo city government in 2005.

“We found very significant issues related to how they record things in their financial statements, the systems they (had) in place to ensure financial accountability,” said Mindy Chambers, spokeswoman for the Auditor’s Office.

City officials attribute the problems to personnel issues that year, which they say have since been addressed.

The city hired a new administrator, Joe Hannan, in 2007. That same year Mukilteo hired a new finance director, Scott James, as well as a new accounting services manager and staff accountant, the city said in its response to the state.

Mukilteo now has new procedures for keeping track of the city’s money.

“Obviously, we saw the ramifications of not having adequate staff in finance,” Mayor Joe Marine said.

The findings don’t carry a financial penalty, but rather are meant to point out problems to the city and the public, Chambers said. The problems did not violate state law but were caused by a failure to follow accepted accounting practices, she said.

The problems included:

Financial statements provided to the auditor did not reconcile to the city’s ledger. The city was unable to explain the difference.

Amounts transferred between accounts were not reviewed by a second party.

The city had no policy for tracking and reporting capital assets, such as trucks and power tools.

The city was unable to easily find documents regarding its assets. During the audit, the city was unable to provide documentation for three assets totaling $704,082.

State auditors spent so much time untangling the 2005 results that audits of the city’s financial statements for 2006 and 2007 were delayed, according to the report. The audit for 2006 is expected out toward the end of this year, Marine said.

Some of the problems in 2005 resulted from the city being short staffed, said Marine, who took over as mayor from Don Doran in 2006.

The city didn’t even have an accountant on staff in 2005, and had turnover in the position in 2006, the report points out.

In situations that call for a second set of eyes, “if there isn’t anybody else to take a look at it, it’s a little tough to comply with that,” Marine said.

2006 was Marine’s first year in office, and he said he waited before making any changes.

“I really wanted to see where things were at,” he said. At the end of that year, he took action.

“In the beginning of ‘06 it was a struggle in terms of getting information,” he said. “The administrator and I had a difference of opinion in terms of what my role was.”

Rich Leahy, who was city administrator at the time, didn’t want Marine attending staff meetings, the mayor recounted.

“I said, ‘That’s not an option,’ ” Marine said.

In early 2007, Leahy left to become city manager of Woodinville. He didn’t return a phone call.

Some of Mukilteo’s accounting problems began to be addressed in 2006, Marine said. He expects the Auditor’s Office report for that year to be better than the one of 2005 and the one for 2007 to be better still.

“It is definitely going in the right direction now,” Marine said.

Reporter Bill Sheets: 425-339-3439 or sheets@heraldnet.com.