Scathing audit points to problems at Chavez Center
Report citing cash-handling, management issues prompts citywide policy review; information related to possible fraud detailed in confidential memorandum
An audit of the city’s Genoveva Chavez Community Center found problems in how the center manages cash, including possible indications of fraud that were detailed in a separate memorandum that the city is refusing to make public, saying it’s a personnel matter.
The scathing audit, which will be presented to the city Audit Committee on Wednesday, has prompted a review and reform of cash-management practices at city facilities that handle money, officials said in a statement Tuesday.
The audit listed two dozen findings, starting with a lack of leadership and oversight in the administration of the popular recreation center on the city’s south side. Other problem areas included inadequate standards for safeguarding and depositing cash and “inappropriate approvals” of agreements with various vendors and nonprofits for day passes, gift certificates and memberships to the center.
“Essentially, there are few if any internal controls around cash handling,” the city’s internal auditor, Liza Kerr, wrote in her 54-page report, which was distributed by the city Tuesday after The New Mexican obtained a copy through the state Inspection of Public Records Act.
“The number, extent, and severity of the issues identified in this report are an indicator of the severity of the problem,” Kerr wrote.
The most potentially explosive information from the audit, however, was being kept secret, according to a footnote in the report.
“Specific information related to indications of potential fraud, waste or abuse as related to this audit are included in a separate memorandum, which is a matter of opinion for a personnel file,” Kerr wrote. “The memorandum is confidential per the Inspection of Public Records Act.”
A city spokesman declined to provide details about that memorandum, calling it a personnel issue, but said the matter had not been turned over to law enforcement authorities.
“The investigation we initiated identified real problems with controls and a lack of correct policies and procedures that created potential for fraud,” Matt Ross said via text. “But there is not sufficient evidence to support a conclusion of fraud.”
The report said the memorandum was provided to the city manager and the human resources director “to determine proper action.”
Kerr said proper separation of employee duties in handling financial affairs “is not understood or being used” at the Chavez Center. Without proper separation of duties, Kerr wrote, a single person can commit and conceal a fraud without being detected for a long time.
“The remaining issues are too numerous to list in this one page summary,” Kerr concluded in her opening letter.
Liza Suzanne, the Chavez recreation complex manager since May 2010, has submitted her resignation, effective Wednesday. As reported last week, a source told
The New Mexican that Suzanne recently had received a letter informing her the city was initiating termination procedures against her. Another Chavez Center manager resigned this year after being accused of selling city-owned scrap metal for personal gain.
“The various issues in this audit illustrate lack of leadership and oversight for the administration of the GCCC,” the report said.
Suzanne did not return messages seeking comment.
The city said an anonymous tip to its fraud, waste and abuse hotline triggered the audit, described as a “limited scope cash handling performance audit.”
“A former employee alleged skimming and [fraudulent reporting of revenues] were occurring within the cashiering function at the GCCC,” the audit said.
The audit described the Chavez Center as Santa Fe’s premier recreation center, a 177,000-squarefoot facility with three swimming pools, racquetball courts, an ice skating rink, weight room, gymnasium and an indoor track.
“Annual revenues for the GCCC average approximately $1.8 million,” the audit said.
The audit faulted not just the management at the Chavez Center, but City Hall, which lacks a citywide cash-handling policy.
“The Finance Department does not have adequate formal policies and procedures,” the audit said. “The foundation of an effective internal control environment includes formal policies and procedures designed and implemented to ensure meeting the city’s objectives. These policies and procedures are the documents that set forth the fundamental principles and methods that employees rely on to do their jobs.”
The city said changes are in the works.
“In recent weeks, the city has taken corrective action in response to this investigation, and the city manager and Finance Department have ordered a citywide review and reform to institute a strict cash management system for all city facilities that handle cash transactions,” the city said in a news release.
“We’ve made progress in rebuilding our fiscal strength and worked to restore public confidence in our abilities to handle taxpayer dollars,” City Manager Brian Snyder said in a statement. “Anything that puts cash at risk and undermines that trust has to be taken seriously. That’s why we launched this investigation and why we are taking action in response to its findings. Moving forward it should be clear to anyone handling cash in our facilities how seriously we take that responsibility.”