Review details red flags for city
Report says determining if any fraud occurred will require further inquiry
City employees manually enter accounting data into Excel spreadsheets, making mistakes along the way, because some apparently are not aware of copy-paste functions. A manager says his workers haven’t been trained because they’re “untrainable.” Workers laugh out loud when asked about the policies that govern their jobs. The city lodgers tax is collected on an “honor system.”
There’s more: Customer credit card information is written on sticky notes and passed between offices by hand.
Tens of thousands of vendors are included in a vendor database, though most aren’t vendors. Some high-ranking finance employees have unrestricted access to every system the city operates.
An external review of the city of Santa Fe’s financial and accounting affairs, released Thursday, made these unflattering findings and more, reflecting an environment that could lead to potential abuse and error across a range of facilities and processes. Some issues go back many years, officials say, but will soon be fully examined and rectified.
City officials, including City Manager Brian Snyder and spokesman Matt Ross, didn’t respond to requests for further comment Friday, a day after they called a news briefing to release a report that identified
62 issues within municipal operations, primarily those involving financial systems.
Whether any actual fraud occurred in these areas was not examined or determined by the Albuquerque-based accounting and consulting firm that conducted the investigation. The report noted that in many cases the potential for problems exists because the city lacks internal controls and policies, or uses out-of-date systems to guide employees’ actions.
Mayor Javier Gonzales said he expects changes to occur quickly. Snyder said Thursday there was no one person to blame, but rather outdated systems and frameworks; he added he expected many of the issues in the report would have been flagged in earlier internal and external audits. The city’s next external audit, he said, is due Dec. 1, and it is being conducted by a new firm to ensure fresh eyes.
Snyder and Finance Director Adam Johnson, who raised concerns that prompted the investigation, said some fixes were already under way before the report was released and that the city’s fraud, waste and abuse hotline, where tips about potential fraudulent activity can be made, would be vigorously promoted anew.
“We want an open and transparent organization that is set up so that staff at all levels can bring forward concerns or complaints,” Johnson said. “I want to promote an environment where red flags can be raised.”
Any determination about whether fraud did in fact occur will require further investigation, the 37-page report stated.
All the same, Snyder placed two employees on paid leave Thursday before he and a pair of other city officials presented the report to members of the media and then made the report publicly available on the city’s website. Snyder did not identify the employees but said they could face further discipline, including possible termination.
It was not immediately clear why the two employees were singled out in the wide-ranging report.
The city’s internal auditor was not placed on leave or otherwise disciplined, despite the report stating her performance “does not appear to have been particularly effective” and that her office is out of compliance with both the city’s internal audit ordinance and “generally accepted government auditing standards.”
The internal audit office’s duties should be outsourced to an external accounting firm, the report recommended.
The auditor, Liza Kerr, has disputed that her reports have failed to address the lack of city policies and that her office is out of compliance.
Snyder on Thursday declined to provide more information about the circumstances of the administrative leave he ordered, other than to say the action would remain in place “until investigations and any resulting disciplinary actions that we find to be necessary are taken.”
A summary of the external review prepared by finance director Johnson stated the investigators brought issues to his attention as they were discovered and were “either resolved or significantly mitigated.”
Johnson said the investigators’ work “provided grounds to pursue additional investigation and test work to uncover possible fraud.” The city has contracted another external consulting firm to assist Johnson as fixes recommended in the report are implemented.
Contact Tripp Stelnicki at 505-428-7626.