PORT ANGELES — Clallam Transit’s oversight of its accounting and financial operations was inadequate in 2007, a state audit shows.
Internal controls over van-pool operations were also inadequate in 2007, according to findings released by the state Auditor’s Office last month.
No money was missing from the books, and Clallam Transit officials have already addressed deficiencies found in the audit, they said at the Transit board meeting on Monday.
While the state Auditor’s Office makes yearly recommendations, board member Mike Chapman said he can’t recall a time when the findings have been this severe.
“The transit board takes these findings very seriously,” he said.
Chapman also serves on the four-member Finance and Administration Committee, which met last Friday to discuss the audit.
It recommended an independent firm conduct a full audit for 2008 in May or June.
Aging computer software was a key factor in the results coming back they way they did, said Chapman and General Manager Terry Weed.
“We’re using this as motivation to replace our software,” Weed said.
“We were planning to replace it in 2010. We’re looking at replacing that at the end of this year.”
Upgrading the software could cost more than $200,000, Chapman said.
The technology is limited to transit systems, Weed said.
Findings
The audit found three deficiencies in Clallam Transit’s internal controls and management oversight of its accounting processes and financial operations:
• Management gave the finance administrator, Jamie Collier, complete control over all accounting transactions, and department heads and staff could not access them.
• Serious internal control deficiencies were found in Clallam Transit’s accounting processes. The finance administrator was not fully using accounting software to record transactions in a timely matter and was not maintaining appropriate documentation to support amounts reflected in the general ledger and financial statements.
• Oversight by the manager and board of commissioners was insufficient to identify deviations in accounting and financial operations.
“Although transit staff and department heads have expressed concerns to Transit management about the lack of accurate, timely and available accounting and financial information, no action was taken to address concerns,” the findings state.
The Auditor’s Office made the following recommendations:
• The general manager and board of directors take a more active role in monitoring Clallam Transit’s finances.
• The finance administrator receive training.
• Clallam Transit establish and follow internal controls for the general ledger to be updated monthly.
• Proper documentation be maintained.
• Unnecessary checking accounts be closed.
• Ensure submitted expenditures are accurately presented and paid.
Clallam Transit responded to the audit by saying it would:
• Expedite the replacement of 20-year-old accounting software.
• Cross-train staff so accounting operations are not so dependent on one person.
• Evaluate accounting and banking activities to increase internal control and reduce risk.
• Ensure sufficient resources are applied to be prepared for the 2008 audit.
• Engage an accounting or software firm to review systems, procedures and documentation for the 2008 financial report to avoid the potential for undetected significant misstatements, and review the internal controls of the proposed replacement accounting software.
• Review progress to address internal controls with the Finance and Administration Committee on a regular basis.
Clallam Transit’s complete response was not published in Auditor’s Office findings and responses report.
Van pools
According to the state, six Clallam Transit van pools had separate checking accounts totalling $2,100 as Dec. 31, 2007.
The accounts were in the names of the van-pool drivers and coordinators and used to deposit monthly fares.
Only the finance administrator could access the bank information, the audit said.
“Although the finance administrator included these amounts in the transit’s financial statements, she did not have any documentation to support these amounts,” the findings state.
Because the van-pool coordinators were not preparing monthly reports, it was possible for money to be misappropriated and not detected.
In response, Clallam Transit says it has strengthened internal controls over the van pool.
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Reporter Rob Ollikainen can be reached at 360-417-3537 or at rob.ollikainen@peninsuladailynews.com.
