North Idaho Fair audit comes back fairly clean

COEUR d'ALENE — Although some sloppy business practices were identified, nothing malicious or criminal was discovered in a forensic audit of the North Idaho Fair's finances.

The forensic audit, approved by commissioners in September, was conducted by Spokane-based CPA firm Eidy Bailly after an internal audit performed by the County Clerk's office in August revealed some fairgrounds employees had taken draws against their future pay as far back as 2005. On Monday, Jason Olson, a partner at the firm who spoke via conference call, gave commissioners and a packed meeting room a look at the draft findings of the audit, which focused on business conducted in 2016 at the fair and suggestions for how the fair can enhance certain financial policies and procedures.

"The findings we have are not unusual for an organization of this size," Olson said at the conclusion of his report.

Although a county memo stated it appeared most of the financial controls were in order, Kootenai County Clerk Jim Brannon said there were "smaller-scope" issues that concerned him and warranted the request for a thorough look at the books. Former fair manager Dane Dugan, who resigned Sept. 1, is noted as having taken 16 advance pay draws since 2012.

According to Olson, a review of the fair's financials revealed the former fair manager provided two lists of personal expenditures made using fair credit cards totaling $1,720.78. Both groups of expenditures, Olson added, were reimbursed to the fair at later dates.

"It's not a great business practice and certainly that should not be allowed to happen within the organization," Olson added, “although we have seen the same thing on more than one occasion in other organizations."

County Treasurer Steve Matheson asked Olson to clarify the timing of those reimbursements compared to the internal audit conducted by Brannon's office. Olson confirmed to Matheson and attendees that both of the reimbursements were made prior to the internal audit being initiated.

Commissioner David Stewart also asked Olson whether the fair board was aware Dugan was making the personal charges on fair credit cards, to which Olson replied they were not aware "based on our interviews."

Among the general recommendations issued by Eidy Bailly were suggestions that the fair make background checks on employees mandatory, as well as create formal written procedures for those employed in accounting related positions. Olson also recommended the fair install security cameras in the area where the safe is located, and the inclusion of user names and passwords for cash registers used at the fair.

Olson added the firm is declining to recommend a look at the fair's finances beyond the 12-month scope of the initial request.

"It's what we expected," said Fair Board Chairman Jerry Johnson of the findings. "We didn't think there was any malfeasance or misappropriation of funds."

Johnson added that fair officials recognized there would be areas in need of improvement, while noting that fair employees are not part of the county. In addition, Johnson said the county provides 10 percent of the fair's annual $1.5 million budget, which is used solely on infrastructure improvements.