PORT ANGELES — Admitting its financial procedures have been “sloppy,” the board president of the Port Angeles Downtown Association said the organization will tighten its operations after a meeting last week with city staff over the group’s 2014 finances.
“We just need to tighten up our stuff a little bit,” Bob Lumens, board president, said Friday.
He commented after a 90-minute meeting over a 2014 preliminary audit with City Manager Dan McKeen, Chief Financial Officer Byron Olson and Tess Agesson, city senior ac-countant and lead auditor, that inclu-ded downtown association member Jan Harbick.
“Of course, we had some sloppy things,” Lumens said, owner of Northwest Fudge & Confections on First Street.
“Come slap my hand for that: A receipt wasn’t stapled to an invoice.”
“I’m a candymaker, not a frickin’ accountant, and neither is [PADA Executive Director Barb] Frederick.”
In the preliminary audit, issued Sept. 26 to the downtown association’s board of directors, city staff said nearly 46 percent of 2014 payments lacked adequate and justifying documentation “to verify that the financial statements are an accurate assessment of activity.”
McKeen had said in the report’s cover letter that “a number of serious issues and concerns” were identified.
They included “USDA — purchased eggs $850 — no business purpose stated,” according to the audit.
Lumens said Friday after the meeting that the $850 was for a sea gull egg-abatement program headed by the U.S. Department of Agriculture and made available to the downtown association’s 180-200 members.
Sea gull eggs are coated with oil to prevent them from hatching, limiting the gull population and the birds’ droppings on city sidewalks, buildings and cars.
The audit was based on the city’s funding agreement with the nonprofit group.
Lumens provided additional information at Friday’s meeting that was not available for the review before the preliminary audit.
“The packet I gave them explained everything we had, which probably should have happened in the first place,” Lumens said after the meeting.
Said Olson: “It looks like they probably have found most if not all of the supporting material we were looking for,” Olson said.
City staff is expected to issue a final audit before the Oct. 13 due date.
“I’m very hopeful this will end on a positive note,” McKeen said.
McKeen, Olson and Lumens said in separate interviews that PADA’s financial procedures would change.
“We will do what makes sense,” Lumens said.
He said the board will take a stronger role in reviewing expenditures of the organization — for which Frederick is the single paid staff member — and that expenditures would be reviewed by second parties.
The group’s 2013 revenue was $93,279, including $20,000 from the city economic development fund.
The audit examined $93,412 in 2014 revenues and $67,611 in expenses between Jan. 1 and July 31.
Expenditures that lacked explanations included $36.97 for tea cups and $52.97 for pizza, according to the audit.
The tea cups were for a tea sponsored by the downtown association, and the pizza was lunch for area youths who volunteered to clean up a well-known though rusted downtown sculpture, the “Gandy Dancer,” Lumens said.
Lumens said that as a preliminary report, “it should not have gone out” and that it is “not a story.”
A copy of the report was obtained last week by the Peninsula Daily News and reported on in Friday’s edition.
Lumens, the designated spokesman for the downtown association, did not returned repeated calls Thursday for comment on the report.
Before writing the preliminary audit, city staff had consulted with Frederick, who also did not return calls Thursday and has referred inquiries to Lumens.
“They did ask, in fact, if they had all the documentation and were told they did,” McKeen said.
Frederick said in the audit that “multiple items were paid without invoices and [the] validity of expenses could not be verified.”
One anomaly was a $1,796.26 payroll check to Frederick, while all others were for $1,319.60, with no explanation.
Lumens said Frederick had received a onetime insurance-related payment.
When city staff met with Frederick, “there was stuff they didn’t find,” Lumens acknowledged.
“The obvious solution is, we find it, we see where it is, we put it in the right place, and there’s not a story.”
The audit recommended that each check to Frederick have a second signature or be signed by a PADA board member and include an invoice or timecard.
Lumens, criticizing the audit, said Frederick as a salaried employee did not even receive a timecard. Lumens has said she is paid roughly $50,000 a year.
Finances reviewed by the audit included funding that passes through the city as taxes on downtown businesses, based on square footage, that are in the Parking and Business Improvement Area (PBIA).
The PBIA is expected to generate about $62,000 in PBIA funds in 2014, Olson said.
But the city, alleging the organization breached the funding agreement, suspended PBIA funding after $34,400 went to the group July 24.
“The city would also like to take this time to correct a misperception that the city would benefit from the [PADA] funds withheld,” McKeen said in his cover letter to the preliminary audit report.
“Parking Business Improvement Assessments will be held in reserve until all contractual issues are rectified.”
PADA has hired Silverdale attorney Richard Shattuck for representation in its fight with the city, paying him with general funds that include PBIA money.
Downtown association revenue also includes event proceeds, membership fees from individuals and businesses outside the PBIA and state B&O — business and occupation — taxes that go to PADA through the state Main Street Program.
B&O taxes do not pass to organizations through the city and were not focused on in the audit, Olson said.
The group is a state-approved Main Street entity that allows businesses to elect to have a portion of B&O taxes go to the downtown association.
________
Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 5060, or at pgottlieb@peninsuladailynews.com.
