State auditor’s report on the City of Wapato is the worst yet

State auditor’s report on the City of Wapato is the worst yet

Multiple state audits of the City of Wapato show city officials have violated state law, failed to comply with the city’s own policies and broken codes of ethics set in place to protect the people governed by those officials.

Documents released Thursday morning by the state auditor’s office detail numerous issues with the city’s finances and city officials’ accountability.

Auditors identified incompetence as the cause: employees untrained and inexperienced, a lack of set policies and employees failing to follow policies set in place.

The Washington State Auditor’s Office released two audit reports: one that addresses financial weaknesses and another that tackles issues with the city’s accountability.

The financial audit identified two findings –essentially issues involving violations of policy, law or codes — both of which are similar to findings the auditors have made in the city’s previous audits.

A search of accountability audits of city or town governments where findings were reported showed six findings — a record for the most accountability findings of any city or town in the past decade.

KAPP-KVEW reviewed both audits and compiled a brief overview of issues identified in the findings:

Violation of the Open Public Meetings Act: The audit identified multiple occurrences in 2018 where the city violated the Open Public Meetings Act.
Inappropriate use of funds: Instead of appropriately taking money from the city’s general fund, the auditors found city officials inappropriately used $125,894 from the Garbage fund to construct a new swimming pool and $117,111 from the Sewer fund to pay for legal expenses. The audit said this could result in higher utility rates for residents and inappropriate subsidies to the general fund.
Decline of city investments: A pattern of financial issues has led to a steep decline of city investments. While the city reported about $2 million in cash and investments leftover at the end of 2016, by the end of 2018 that number was down to just about $75,000. “The city risks not being able to meet future financial obligations or continue operations at current service levels,” the audit said.
Nepotism: The auditor found then-Mayor Juan Orozco violated the city’s nepotism policy when he hired his daughter to be the city’s Deputy Clerk-Treasurer.
Violation of the city’s personnel policy: Auditors found while the city hired 11 employees during 2018 and 2019, they did not follow the city’s personnel policy, which requires permanent positions to be posted or advertised.
Non-compliance with state procurement requirements: Auditors found the city failed to formally put projects out to bid when they were required to do so under state law, including the swimming pool renovation project.
Inadequate internal controls: The audits found the city’s internal controls over the preparation of accounting and financial statements were inadequate to ensure accurate and timely reporting. In one instance, the city submitted financial statements 118 days after the deadline. In another, the city did not submit its Schedule of Liabilities for audit, resulting in the city understating its liabilities by $8 million.
Hires violated state law, code of ethics and city policy: The accountability audit found then-Mayor Juan Orozco violated the code of ethics, city policy and state law when he created a new position, resigned from his post as mayor, and had the newly appointed mayor hire him for that position. According to the audit, Orozco directed changes setting the city administrator’s salary at $95,000 per year for the full term of seven years, plus severance pay for six months — which the employee would continue to receive even in the event of being fired. “The former Mayor received special privileges when he used his position as Mayor to create the City Administrator position and the terms of the contract he was later appointed to fill,” the audit said.

This is the first in a series of stories KAPP-KVEW will be publishing detailing the findings of the audits.

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