Going on a year past the date it was due, Port Arthur’s annual audit was completed and the results provided to City Council on Tuesday.

Christopher Breaux, engagement partner with the CPA firm Whitley Penn LLC., said the city’s financial records were in keeping with industry standards, but there were numerous areas in need of improvement.

Breaux cited difficulties associated with the audit’s preparation.

Most significant was a turnover of management personnel and a shortage of personnel in the finance department.

Last July, Port Arthur’s former Finance Director Deborah Echols abruptly submitted her resignation, leaving the city without a finance director until Jerry Dale was hired on a temporary basis.

The auditing firm identified numerous findings in the report on the city’s financial operations during the 2014 fiscal year.

Among those was the need to reconcile the city’s cash accounts on a timely basis. Bank reconciliations should be done monthly, Breaux said.

The firm also identified the need for a centralized grant administrator. Having one might have prevented the city from drawing down Federal Transit grants or three years, or Community Development Block grants for one year.

City Manager Brian McDougal said he plans to ask that a new position be created in the 2016-2017-budget cycle.

The audit also found there was no segregation of duties in the city’s utilities department and that employees were allowed to set up payment plans.

Another finding involved the city’s purchasing procedures.

“People would purchase first, then get a purchase order. They need to follow the rules,” Breaux said.

The use of P-Cards was also identified as needing safeguards. Nine out of 40 tested in 2014 did not have proper documentation or the approval of a department head.

The city was also cited for not having developed a fraud risk program, though it was noted Port Arthur recently instituted a fraud hotline.

McDougal said the city would be putting together a risk assessment team to implement a fraud risk program.

Since 2014s’ audit’s completion in December, the firm has been working on the 2015 audit.

Many of the findings from the 2014 audit will be seen again on the 2015 audit since the staff would not have had time to implement the 2014 recommendations.

City Council also hired the firm BKD, LLP of Houston to conduct a forensic audit of the city’s finances. The company will be paid $100,000 to conduct the first of what will be a three-stage audit.

E-mail: sherry.koonce@panews.com

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