PENDLETON - The city of Pendleton received a clean audit report this week but was told it needed tighter fiscal controls in some areas.
Auditors Dickey and Tremper of Pendleton noted in a management letter to the city that it ended last fiscal year with a healthy unreserved fund balance of more than $4 million. The balance was about 49 percent of total general fund expenditures.
Rob Tremper, a partner in the certified public accounting firm, noted a few "opportunities for strengthening internal control, improving operating efficiency and reducing expenses."
Specifically, Tremper expressed concerns with policies and procedures at the city-run airport and cemetery. Both departments need written policies and procedures, the management letter stated.
"The airport fund uses the full accrual method of accounting, however, the record keeping for terminal concessions and residential leases are maintained primarily on a cash basis," the management letter stated.
In cash accounting, income is credited when received and expenses debited when spent. Under the accrual method, income is recorded when a sale occurs or a service is rendered, regardless of when payment is received. Expenses are recorded when goods or services are received, even though they may not be paid for until later.
The auditors noted "several past-due accounts" being managed by the airport staff and "the restaurant concessions were almost a full year past due at the time of our audit fieldwork," which was completed in the second half of 2004. They recommended switching all accounting to the accrual method and requiring monthly sales reports from the restaurant.
The City Council dealt with that matter promptly Tuesday, amending the lease with Elvis Lamarr, owner of Elvis's Bar and Grill in the airport terminal. The new agreement requires $600 per month, about the average for the past two years, plus annual gross income reports. The previous agreement required $450 per month plus 5 percent of gross sales.
At the cemetery, the auditors found "several practices, which could allow sales to not be recorded or deposited on a timely basis, or at all." In addition to developing written policies and procedures, they recommended a formal basis for recording and tracking sales, receipts and receivables.
The third "opportunity" the auditors noted was for the finance department to review all loan drawdowns before incurring new debt. During the past year, they said, loan proceeds and costs related to the Keystone expansion project were not fully recorded because the finance director had not seen the documentation and was unaware of the proceeds.