Audit: County's finances in good shape, not perfect

SANDPOINT — Bonner County’s finances and accounting practices are in good health, but there are some wounds that need to be addressed, according to an external audit of the 2011 fiscal year.

“We have no money missing, no fraud. We have a clean bill of health,” county Commission Chairman Cornel Rasor said.

However, the audit performed by DeCoria, Maichel & Teague notes three significant deficiencies and material weaknesses in the county’s financial statements.

The county is still unable to abide by a Governmental Accounting Standards Board requirement for significantly expanded financial reporting because it does not have staff capable of preparing the financial statements.

The audit also determined that the county’s statement of net assets relied on improperly correlated accounting methods, leading to incorrectly reported unearned property tax revenues. Finally, the county’s auditing division does not have fully formalized procedures for periodically reviewing and reconciling each general ledger account.

The gravity of the deficiencies is a matter of debate among county officials.

“There’s some serious allegations in here, serious findings,” said Commissioner Mike Nielsen, who said the audit uncovered $2 million in accounting errors.

Net assets, for instance, were overstated by $655,545 because the former Schlotzsky’s Deli building in Ponderay was counted as an asset even though the county only briefly owned it. Unsubstantiated and unrecorded airport improvements also factored into that sum.

Clerk Marie Scott is not fazed by the audit’s findings.

“Each audit provides us with suggestions on steps we can take to tighten up our operations or to make improvements in our procedures. This audit was no exception,” said Scott.

In order to comply with the GASB rule, the county would have to have another accounting firm or a different team within the auditing firm prepare the county’s financials. It could also hire a well-trained accountant to prepare the financials.

The two former options could cost the county up to $10,000 a year, while the latter option could cost up to $70,000.

Treasurer Cheryl Piehl, meanwhile, said there is not agreement around the state that the GASB rule is a requirement counties must adhere to.

“I would like to work with the other counties in the state of Idaho to see if the costs can be absorbed together to save the taxpayers’ money,” said Piehl.

Nielsen’s insistence on the board’s increased involvement in financial matters has found him at odds with Scott and Piehl, in addition to Commissioner Lewis Rich.

“It’s not what I would call commonplace,” said Rich, who questioned the independence of an audit that was vetted in draft form by Nielsen and Rasor before it was formally presented.

Rich, who had been the external audit liaison before Nielsen absorbed the role, candidly admitted there were aspects of the audit he did not understand.

Warren Erickson of DMT said there is nothing untoward about the commission’s involvement in the external.

“The financial statements are management’s representation and it’s important to have management involved in the process,” said Erickson.