2007 The Year in Business, No. 6: City reels after scathing audits

The audit process began in summer 2006, when a group of more than 5,000 citizens led by current Springfield City Council member Doug Burlison signed a petition that was sent to the state auditor’s office.

The Springfield audit, which covered the Municipal Court, city government and City Utilities, cost the city about $80,000. Under state statute, if a petition containing at least 5,000 valid signatures asking for an audit of a government entity is sent to the state auditor’s office, the entity is required to pay for the audit.

Results of the Municipal Court audit were released first in July. That audit found that receipts totaling more than $1.3 million had been misappropriated between July 1997 and June 2006.

The state audit of the court followed an internal investigation, after the city’s finance department began noticing accounting discrepancies in summer 2005.

In June 2006, the city hired a forensic examiner with accounting firm BKD LLP to conduct an internal audit, which led to the arrest of former accounting services representative Rhonda Bateman.

Bateman pleaded guilty to stealing and was sentenced in November to 10 years in prison.

As a result of the internal investigation, the court modified its money-handling policies by adding an additional camera monitoring the vault, the presence of two employees when the vault is opened, computer-generated nightly reports on cash tray balances, and a daily file of all transactions by cashier and type that is checked against bank deposits.

The court, however, was just the beginning. State Auditor Susan Montee released results of the city audit Dec. 6.

The report stated that the city accumulated “significant future liability” with investments in the Heer’s building and the Heer’s and College Station parking decks.

The city, however, stood by the expenditures in a written statement.

“City councils through the years made deliberate and calculated investments in center city in open meetings with substantial public discussion guided by voter-approved referendums, the Vision 20/20 process and the city’s commitment to develop the public infrastructure necessary to support significant private investment,” the statement said.

Other notable issues included the unfunded liability of the Police Officers and Firemen’s Retirement System Plan, $8 million in city funds used to subsidize the Jordan Valley Ice Park and Car Park, and inadequate controls on the $6.6 million charged to 450 credit cards issued to various city employees.

Springfield also was lambasted for not having an internal auditor; the city is now addressing that by preparing to hire one on a contract basis while the search goes on for a city manager to replace Bob Cumley, who retires in June.

The audit trifecta concluded Dec. 18 with the release of the CU audit.

That audit found that while the utility’s daily operations are sound, some utility payments are subsidizing other services, which could violate the state constitution. Additionally, the report said some funds are being spent on unnecessary items, such as employee rewards and perks.