The City of Bremerton is set to be slapped with two findings by the Washington State Auditor’s Office.
For the second year in a row, the city failed to comply with the Davis-Bacon Act, a federal law designed to ensure laborers are paid prevailing wages while working on public projects.
In addition, state auditors found that the city’s Community Development Block Grant program was not administered properly. Specifically, four of the seven loans that auditors looked at no longer qualified to be deferred and the city should have collected $23,120. Those loans included two to a borrower who passed away in 1997 and one involving a home that was sold in 2008.
“The city was still reporting a CDBG loan for $17,610 as outstanding at the end of 2012, even though it was paid in full in 2002,” a draft audit report states.
The final report from the state’s latest audit of Bremerton is slated to be released Sept. 23. A draft report was provided to members of the city council’s Public Safety and Parks Committee following an unscheduled briefing that was not on the agenda Tuesday night. The briefing was conducted by Cathy Johnson, the assistant director of Financial Services, and Mayor Patty Lent.
When council member Eric Younger asked who was responsible for the failure to comply with the Davis-Bacon Act, Lent said that folks from public works and finance were involved in an investigation by the Department of Labor and Industries and steps have been taken to correct the problems moving forward.
“I’m sensing evasiveness here,” Younger said.
“I’m not sure it was clearly identified as to whose responsibility that would be,” Johnson responded.
The city spent $1,544,528 in federal grant money on the Park Avenue Plaza Phase Two project in 2012. During the state’s audit of 2011, they found the city out of compliance with the Davis-Bacon Act and reported a finding. The city contracted with a management company to oversee the project through July 2012.
“The management company had not properly obtained and reviewed certified payroll reports, nor did the city have an internal control process to monitor the management company to ensure compliance,” the draft audit report states. “The city’s contract ended with the management company in July 2012; however, the city did not have internal controls sufficient to ensure someone obtained or reviewed weekly certified payroll reports through at least December 2012.”
When council member Leslie Daugs asked Johnson for a copy of the draft audit, the mayor told Daugs that she and Younger would each get one.
“We’re going to give everybody on council a copy,” Lent said. “We had two council members that attended the exit audit. We wanted to bring it to your committee so two more would have it. The reason is that when this does get produced to the city, within a short time it goes straight to the newspaper and they don’t hold it until the next day. They’ll have it online within moments.”
A report of the city’s exit conference with auditors raises other issues not addressed directly in the audit report. The city’s financial statements were not submitted in a timely manner and inter-fund loans were not authorized or posted to the general ledger, according to the exit interview documents. Additionally, auditors said they found that, “Notes/Contracts Deferred was overstated by $44,730. One loan amount was overstated, one loan was unsupported, and two loans had been previously paid in full.”
Lastly, the auditors say that $27,150 was “transferred from Fund 306 Capital Outlay to Fund 454 Wastewater Utility Capital in error.”
