State auditors: County’s records complete, though flawed

State auditors said Monday Whitman County gave them a full statement of its annual financial condition for the first time in six years, but noted several instances in which county policy leaves openings for inaccuracies.

State auditors Debbie Pennick and Joel Gilrein reported the results of their audit of the county’s 2009 financial statement to a room full of county officials Monday morning in the commissioners’ meeting room.

Some county officials were heartened by the sheer fact the county’s report was audited without conditions for the first time since 2003.

“I think today is a very significant day for us,” said Commissioner Greg Partch. “Because this is what we’ve been striving for - an unqualified opinion.”

The auditors’ report was issued without any qualifying statements over the county’s financial condition.

The 2008 statement was audited, but that audit report criticized it for being riddled with errors.

While the opinion says the county’s 2009 finances were presented fairly, it does chastise the county for submitting six different versions of the 2009 statement.

Esther Wilson, county systems administrator who helped prepare the 2009 statement as the sole surviving member of the county’s defunct finance department, said the six versions were needed as the county corrected errors found by auditors.

“Any material errors they found, we fixed,” said Wilson. “That’s helpful now, but will be more so in the future because we will have reliable information.”

Lack of reliable financial statements was one of the driving factors in commissioners’ June decision to sack the finance department.

Auditors take a sampling of the county’s financial statement and extrapolate based on that information the overall accuracy of the county’s accounting.

Among findings in the audit is the county’s inability to match its investments on record with bank statements. Gilrein said the audit turned up a $196,000 difference between county and bank records.

County officials plan to write off the difference as they close the 2010 books in order to have a zero sum balance to enter into the new, half-million dollar New World accounting software, planned to go online in April.

County officials were quick to point out there are no suspicions that the money has been taken. They said the imbalance is a result of faulty bookkeeping.

“We’re not missing any money,” said Partch. “It’s just been misappropriated.”

State auditors noted several areas, like investment tracking, where the county’s practices were not adequate to provide accurate financial information.

“This is a continuation of a situation that has been occurring for a number of years,” said Pennick.

They noted a lack of documentation to support court revenues, equipment and infrastructure depreciation rates and in many other funds. They also pointed out several areas in which county policy did not set clear guidelines to allow for justification of expenses.

“These were mainly housekeeping issues,” said Pennick, adding the above issues are not entirely significant now, but may provide opportunities for fraud in the future.

Many of the areas in which auditors released findings were a result of the county’s decision to report its finances in the more intricate accrual accounting system. Accrual accounting tracks the value of all county-owned assets, instead of just financial transactions. The accrual statement gives potential investors more detail into the total value and the scheduled depreciation of the county’s assets.

County officials last October decided to report 2010 finances in the simpler cash model, which shows the county’s financial status at the end of each year. The decision to report in accrual was made in 2003; the last year the county had a clean audit.

Partch said the cash system, along with the information from the 2009 report, will make it easier for the county to comply with state laws in the audit of 2010.

“We’re very, very close,” he said.

Pennick said the county’s audit report will be posted on the state auditor’s web site by Jan. 24.