A new state audit of the Key Peninsula Metropolitan Parks District lists concerns with how the agency handled credit card purchases and payroll oversight, among other findings.
The state Auditor’s Office reviewed the books of the parks district that collects roughly $900,000 a year from property owners on the Key Peninsula. The audit looked at transactions from Jan. 1, 2010, to Dec. 31, 2012. It focused on internal controls and whether the agency complied with state laws, as well as its own policies and procedures.
It turns out it didn’t.
“I think as a small agency we do the best we can,” the district’s executive director, Scott Gallacher, told The News Tribune. “We apologize to the residents. There’s been no misappropriation of funds.”
The audit found Gallacher and three employees used a Costco American Express credit card to make purchases for the district, according to the report issued Dec. 23. The card lists the park district as the cardholder, but it was issued under Gallacher’s personal account.
“The district paid the Costco membership for the AMEX card for 2010, 2011 and 2012. The reward points earned by the AMEX card were kept by the executive director,” according to the findings.
That practice has since been stopped, Gallacher told a reporter. The reason the account was issued under his personal line of credit is that Costco wouldn’t allow the district to get a card without more financial backing when it formed in 2004, he said.
“Because we were new, we couldn’t get credit,” Gallacher said.
He said there was no misuse of public money for personal gain, and he potentially even put his personal credit at risk, such as if the district had ever been late in paying its bills.
It’s against state law to extend personal credit to a park district and it’s against district policy to use a credit card that mixes personal purchases with district purchases, according to the audit.
Gallacher still has the credit card but the district is no longer listed as a cardholder, he said.
Park district board president Bill Trandum said the board knew about the issues at the time the Costco card was obtained. Trandum was not on the board at the time.
Trandum said he was surprised with the findings, especially because a 2011 audit didn’t list the same concerns. That audit reviewed the district from Jan. 1, 2008, to Dec. 31, 2009.
“During the interim three years we haven’t changed a thing in the way that we do stuff, but boy, they sure came up with a whole bunch of administrative stuff,” Trandum said. “We have now corrected virtually everything that was there.”
The Costco credit card was in place at the time of the first review and drew no response from auditors, Trandum and Gallacher both said.
Tom Shapley, deputy director of communications for the state Auditor’s Office, said the most recent audit drew different findings because it reveiwed different areas. The first audit did not look at the park district's credit card usage, which is why it wasn't caught earlier. The practice is against the law and should be changed, he said.
“It’s just not a neat and tidy way to do things,” Shapley said. “We don’t consider these things as ‘gotchas.’ We’re here to help local governments and state governments do things right.”
The audit also found fault with how payroll was approved. Park district policy requires the director and employees to sign off on timecards, but Gallacher only reviewed overtime and compensatory time. An administrative assistant approved timecards without Gallacher’s review.
The district has six full-time employees and some seasonal staff. Gallacher now reviews all timecards, he said.
As board president, Trandum, who previously worked as a chief financial officer, also signs off on all paychecks. Trandum has acted as president for two months after the former president resigned for personal reasons. Trandum had been vice president and has been on the board since 2010.
“They certainly got my attention,” Trandum said of the audit.
Gallacher and Trandum want Key Peninsula taxpayers to know the district hasn’t misused their money and that officials quickly worked to fix the problems after learning of the audit findings.
“We are very good stewards of the public dollars, but we’re small,” Gallacher said. “Sometimes we have to go through our policies and procedures to make sure we’re doing them the right way.”
Because of the findings, the district will be subject to another audit in 2014.
This story has been corrected to reflect state audits of the district reviewed different information, resulting in different findings.
Brynn Grimley: 253-597-8467 brynn.grimley@ thenewstribune.com