State auditors find county’s books unreliable

For the first time since 2003, Whitman County’s financial statement has been independently audited, and the results show the information on the books is unreliable.

State auditors released last Thursday the results of their review of the county’s 2008 financial statement.

Auditors blamed a number of factors, but said the core of the problems was the county’s decision to report finances on the more intricately detailed accrual basis instead of on a simpler cash basis.

“The county’s internal controls do not make adequate allowance for the complexity of this reporting option,” the report stated. “In addition, the County does not monitor financial statement preparation to ensure information is accurate and complete.”

The report said the county has not dedicated adequate resources to the financial statement or to oversight of the county’s entire financial operations.

“The deficiencies in internal controls make it reasonably possible that additional material misstatements could occur and not be prevented or detected by the County in future years,” said the report.

The auditor’s report also noted the county’s New World accounting software, purchased in 2005, has not been installed and the existing outdated system does not provide accurate information.

In the county’s written response, Commissioner Greg Partch said the county has refocused its efforts on fulfilling state requirements.

“We have worked hard over the last four years and invested a significant amount of money in resolving these areas of concern,” Partch wrote. “We believe by this time next year there will be substantial improvements.”

County employees began training to use the New World system last week.

Partch’s statements were included in the response segment of the report.

Since purchasing the New World system for $331,600 in 2005, the county has paid the Michigan company $399,622 for software updates and training.

The auditors report found $582,000 invested in area banks that was not accounted for on the county’s ledger.

Treasurer Bob Lothspeich said the problem was a matter of bookkeeping. He said he first became aware of the problem earlier this year.

Lothspeich said he and former finance director Bev Divine planned to reconcile the accounts after treasurer’s staff finished processing first-half property tax payments.

Reconciling the accounts prior to now has been nearly impossible because the books have not been audited, he said.

“You can’t reconcile if you don’t have a number to reconcile to,” said Lothspeich. “At least now we have that.”

District Court transactions were not done in conformity with the process used by courts across the state. Because of that, auditors could not verify the validity of more than $1.6 million in transactions.

The report also said the county did not properly calculate the liability costs for its four landfill cells, undervalued or omitted county-owned buildings and over-reported depreciation of assets.

Auditors began reviewing the 2008 statement May 10, almost a full year past the state’s submission deadline, which would have been May 31, 2009.

The 2008 statement was turned over to the state last October, after missing last year’s deadline.

In April, the county was alerted of errors in the statement and granted another extension. Debbie Pennick, lead auditor for the state crew, said correcting the errors would have added 150 hours of time to the state’s financial review.

The county contracted with two Spokane accounting firms to help assemble the 2008 report. Between the firms of Dingus, Zarecor and Associates and Anderson Peretti, the county has spent more than $25,000 in consultant fees.

According to warrants on file in the county auditor’s office, the county paid $7,500 to settle a contract with the Dingus firm and made $7,790 in payments to Anderson Peretti in May alone.

The county paid the state auditors office $22,804 for its review.