Audit shakes up city By Erin Hottenstein Wyoming Tribune-Eagle CHEYENNE  For the third year in a row, an audit of the citys books has uncovered serious problems. This time the results may be so bad as to affect the citys bond rating.

Because of the audit, Mayor Leo Pando said Monday he had asked for and received city treasurer Frederika Barelas resignation.

Pando and the Audit Committee, made up several City Council members, heard the news during a meeting Monday.

Lois Huff, an auditor from Porter, Muirhead, Cornia and Howard, said her firm was considering giving a "qualified" report. The firm is wrapping up the audit, which began Sept. 11.

Generally, auditors report on an agencys books and may note official problems, such as "reportable conditions" and "material weaknesses." They also may send a management letter that talks about problems not yet serious enough to report.

Then the auditors can say that what is in the agencys books has been "fairly stated" and they give an "unqualified" report. In other words, the books are a fair and accurate picture of the agencys financial status.

A "qualified" report means all or part of what is in the books is not an accurate picture.

The citys audits for the past two years were unqualified.

Huff said last year that a qualified report potentially could hurt the citys bond rating.

The problem is that the city seems to have an ongoing problem with bank reconciliations, Huff said Monday.

"I was surprised when we came in that it still wasnt being done," she said, referring to similar problems found in the 1997-98 fiscal years books. "This is really important."

The bank reconciliations have been off by as much as $600,000 since January, she said, adding that right now the number is around $15,000.

Pando said he felt disappointed and mad about the lack of reconciliations when he found about them Monday. But several city officials, including Pandos executive assistant, Joe Dougherty, said the mayor had been told Sept. 11.

"She (Huff) came in the first day and talked to the mayor about the reconciliations," he said.

Dougherty said he did not witnessed the conversation but talked to the mayor himself three days later.

Pando said he asked Barela to resign Monday. She did and will be gone by Sept. 30. Accounting director Barb Dorr will become the interim city treasurer.

"I had to take this action to make sure this thing is righted," Pando said.

As for monthly reports that Pando was supposed to have been receiving about the reconciliations since the 1997-98 problems, the mayor said he probably hadnt gotten one since January. He also said the reports were oral, not written.

"I dont know," he said. "I had other stuff. I didnt even think about it. I didnt realize I wasnt getting them."

Pando said he didnt fire Barela following the 1997-98 audit because she had done a great job until then. She deserved a second chance for her 21 years of loyal service, he said.

Barela told the Audit Committee on Sept. 7 that the bank reconciliations were done.

On Monday Barelas story changed as she talked about the problem.

She first said she realized in February that a $600,000 payment had been incorrectly credited in November 1999. She said her office tried to fix, or reconcile, the mistake for month. But she said she had software problems.

Barela also said she was not aware of other reconciliation problems.

Then she added, "There may be a few thousand here and there, but we thought it was a timing thing."

Then she said she didnt know how many reconciliation problems there were.

Finally, she said the reconciliations "were done."

"She (Huff) is saying they dont balance, but they were done," Barela added. "I knew about the $600,000."

Dorr said reconciliation means the amounts in the bank statements and the general ledger match. When something is reconciled, the mistakes have been fixed, she said.

Dorr also said the problem was that the bank statements had not been reconciled with the general ledger since January.

Audit Committee Chairman Don Pierson said even though he was waiting for the final report, he was upset.

"It was glaring," he said. "It was upsetting to think we still have bank reconciliation problems."

Huff also pointed to several other, smaller problems:

The citys new investments and transfers were not being reconciled.

The city was not properly accounting for state and federal grants.

For fiscal year 1997-98, the city finally sent bank reconciliations to the auditor eight months after the audit, in February 1999.

When the city finally received the report on the 1997-98 audit in June 1999, Pando threatened personnel changes if the reconciliations for 1998-99 were not done by the September audit. They were.

The major problem in 1998-99 was not bank reconciliations, but that the city was not billing the Wyoming State Loan and Investment Board. Auditors found the state owed the city more than $900,000. http://www.wyomingnews.com/story01-main.htm

-- Doris (reaper@pacifier.com), September 19, 2000