SULTAN — A state audit of the city’s 2007 financial records has determined that officials didn’t do enough to safeguard the public’s money.

City officials didn’t compare the city’s bank statements to its books, according to the State Auditor’s Office findings, which were released this week.

That left the door open for payments to be entered in the books but not deposited in the bank, city administrator Deborah Knight said.

She added that no money was misplaced or stolen.

“We weren’t taking an extra step,” she said.

A finding is the most serious response to an audit, said Mindy Chambers, a spokeswoman for the auditor’s office. The auditor’s office will send cities a warning letter if they spot a minor problem. This issue called for more serious action.

“This is a sign that there were some inaccuracies,” she said. “The absence of a system could lead to mistakes in the future.”

However, Chambers said the auditor’s office found similar problems in about half the Washington cities audited this year.

The auditor’s office also dinged the city for accounting errors. The city figured it had 10 percent more cash in the end of the year budget than actually existed. The error was corrected in the final financial statements.

The city switched to a new accounting program in the middle of 2006 and staff didn’t have enough knowledge and experience to work the program properly, the auditor found.

“We believe it’s a problem with the system and not user error but we need to get that worked out for next year,” Knight said.

She said the city plans to talk with the vendor of the program to make sure payments are posted twice in the system.

The auditor also found problems with the city’s choice of financial reviewer. The city hired a consultant from the city of Marysville to review its financial statements, and the review didn’t dig deep enough to find the problems in the city’s finances, the auditor found.

The city is responsible for ensuring finance reports are accurate, Chambers said. Most cities use someone employed by the city.

Knight said the city will likely hire an outside consultant with more experience such as a former state auditor.

“We certainly want to ensure we are managing the public’s money efficiently,” Knight said.

The state auditor’s office examines financial information and compliance with state, federal and local laws of all local governments. The state audits Sultan annually. In 2006, the state made no findings for the city, but prior to that year, the state reported 14 findings.

The auditor doesn’t level fines or other penalties against cities. The state will review the city’s progress at next year’s audit.

“It looks like they are making some changes and that’s good,” Chambers said.

Reporter Debra Smith: 425-339-3197 or dsmith@heraldnet.com.