PORT ANGELES — State auditors who presented a draft review of Port of Port Angeles finances pointed out four areas of concern related to 2013 meal reimbursements and 2011 and 2012 finances, including lease-related issues that cost the port $200,000.
In response to several citizen complaints, the auditors said they found no proof that the board violated the state Open Public Meetings Act, port policies or state law when Jeff Robb resigned as executive director and commissioners immediately hired him as environmental affairs director.
Mike Riley, state auditor in charge, and Carol Ehlinger, the agency’s Team Port Orchard program manager and assistant manager for the audit, presented the results of the annual review at Tuesday’s regular port commissioners’ meeting.
Riley and Ehlinger reached a finding — the most serious level of reporting — that the port lacked adequate internal controls over lease contracts.
They reviewed 18 lease agreements from January 2012 to December 2012.
Of those, 11 did not have surety bonds as required by the contract.
The port had to write off $200,000 because it did not obtain adequate surety on the former Peninsula Plywood site, according to the audit.
In addition, eight were not up to date and three did not have current contracts.
“Without adequate internal controls, the port is unable to determine if it is collecting all potential revenue and adequately safeguarded port assets,” according to the “Schedule of Audit Findings and Responses.”
In response, port management said the staff is conducting a “comprehensive inventory” of leases and is increasing lease-related staffing.
“It will take considerable time to work through the out-of-date leases,” according to the response of port management contained in the six-page finding.
“We have commenced action to address issues raised in the finding,” interim port Executive Director Ken O’Hollaren said at the meeting.
The port’s management of leases was the focus of a 2013 whistle-blower complaint by then-Director of Business Development Colleen McAleer, who was elected to the port board of commissioners in November.
Riley and Ehlinger also issued three “management letters” that are less serious than findings but include recommendations for making improvements:
■ Eighteen reimbursements totalling $746 from 60 reimbursements from January 2013 to October 2013 lacked supporting documentation.
Three of those reimbursements were “substantially above” the suggested reimbursement rate.
Three meals were “in excess of $80,” Riley said.
Meals also were being reimbursed for internal port meetings, which is “outside the port’s policy,” according to the audit.
The report recommended that port obtain itemized receipts for all reimbursements and that the port better define travel and reimbursement policies.
■ The 2012 financial statements were submitted 165 days past the May 31, 2013 deadline.
■ There were ineffective internal controls over accounting for pollution remediation expenses and liabilities from January 2011 through December 2012, leading to a “material error” of $1.2 million.
“The port was unaware the $1.2 million pollution remediation expense was required to be recognized as an expense on financial statements,” according to the audit report.
The error was corrected, it said.
It was recommended that the port implement effective internal controls.
In an interview after the meeting, Riley and Ehlinger addressed the citizens’ concerns over Robb being hired as environmental affairs director.
“We did not find any indication the port did anything inappropriate with regard to their policies and procedures and state law,” Ehlinger said.
Riley also said they found no record of an agreement between Robb and the commissioners that he would be environmental affairs director upon his resignation, an agreement Robb cited when he resigned.
Commissioner John Calhoun said it was “a mistake” that the word “agreed” was used.
Robb would not comment Tuesday on the audit.
“I’ve been told to limit any discussion to the role and responsibilities that I am currently undertaking,” he said.
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Senior Staff Writer Paul Gottlieb can be reached at 360-452-2345, ext. 5060, or at pgottlieb@peninsuladailynews.com.
