State: Accounting, financial reporting problems in Mukilteo

MUKILTEO — The state Auditor’s Office has issued a report detailing problems it found in the city’s accounting and financial reporting during 2014 and 2015.

The 2015 audit report was released Thursday by the Auditor’s Office, which examines the finances of all governmental organizations in Washington.

“We recognize that there were some mistakes and we take them seriously,” said Mayor Jennifer Gregerson. “I believe most of the problems have been fixed.”

The report acknowledges that the city had turnover in three key accounting positions during 2015, including the finance director, accounting manager and staff accountant.

The finance director and staff accountant position were filled later in the year. The accounting manager job wasn’t permanently filled until this year.

The city’s previous finance director, Scott Morgan, left in mid-year last year after being at the city about a year. He received a severance package of $27,072.

“We’ve been through a lot of changes, no question,” said Bob Champion, city council president.

Staff turnover delayed the preparation of the 2015 financial statements, the auditor’s report says. State law requires that financial statements be filed with the state Auditor’s Office within 150 days of the close of each fiscal year.

“We were about two months late getting everything done,” said Doug Volesky, the city’s finance director. Some of the problems being corrected date back to a loss of city financial data in a 2012 computer crash. That led to problems straightening out the books for three years beginning in 2013, Volesky said.

Last year was the fourth consecutive year the city missed the deadline for filing its annual financial report with the state. The city will meet the deadline this year, Volesky said.

The auditor’s report found several things which it felt could lead to financial problems not being prevented, detected or corrected in a timely way.

They included problems in how expenses were accounted for in the $323,110 Smugglers Gulch stormwater project in 2014. They were submitted as an expense instead of breaking out the differences between capitalized costs, repairs and maintenance costs, the report finds.

The city discovered the error and changed its 2014 financial report, the auditor’s report notes.

The auditor’s report also says that the city did not perform any 2015 bank reconciliations until May of this year. Reconciliation essentially is similiar to consumers balancing their checkbooks.

It took until May of this year to finish reconciling the 2015 books, Volesky said. Gregerson said that the city now reconcilies its books monthly.

“We work really hard to make sure we’re sharing all the information we can and are as transparent as we can be,” she said.

The city’s general fund budget is just over $14 million, and the city has reserves of just over $4 million, Volesky said.

A team from the auditors office met with city officials Dec. 14 to discuss the issues in its report. In another document, it says the city has made significant improvement in timely financial reporting “and is now back on its normal audit schedule.”

Volesky’s 14-month tenure as finance director is ending at the end of this month. He said he is taking a job with the City of Mount Vernon.

The city is accepting applications for the finance director’s job through Dec. 31 and will pay a maximum salary of $136,128.

The city recently conducted a salary survey to ensure the city can attract and retain good candidates, Gregerson said.

Sharon Salyer: 425-339-3486;

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