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Audit raises questions about VIFR’s finances

A draft audit of Vashon Island Fire & Rescue (VIFR) found the agency had “lax or nonexistent controls in all areas” of its operations and that as a result it placed “public resources at a high risk of loss, misuse or misappropriation.”

The audit, which looked at the agency’s operations in 2006 and 2007, also said the fire department failed to track money owed to it, “although the district bookkeeping system can be programmed to do so.” As a result, the audit report said, “we were unable to tell how much was owed to the district or by whom, because these records were not kept.”

What’s more, the audit found, employees’ expenditures often lacked adequate documentation. In one instance, for example, an employee submitted a $995 hotel expense described only as a “conference.”

“We noted many reimbursements lacked receipts, approvals and other documentation,” the auditor added.

But the routine audit, conducted by the state auditor’s office, did not find any fraud, embezzlement or other criminal activity, commissioners noted. What’s more, they said, it came after a few years of remarkable turnover at the small department, which has had three fire chiefs in as many years.

“I think the turmoil of having several chiefs in a row here created a lot of these issues, because the corporate memory wasn’t there,” said Jan Nielsen, a commissioner for the past five years. “We had great office staff, ... but we didn’t have the long-term leadership.”

Commissioner Neal Philip agreed, adding that Hank Lipe, the new fire chief, has already begun to reform the district’s accounting procedures.

“I have disagreement with the way they’ve characterized things,” he said of the audit. “But we respect the auditors’ findings, and the chief is already working on ways to address them.”

Lipe, who started at the district in August — on the same day auditors began poring over documents at the fire department — has already hired an independent accountant, Peter Lake, to oversee the department’s accounting procedures.

In an interview last month, Lipe said he was concerned by the lack of independent oversight of the agency’s financial systems and believed an out-of-office accountant will be able to provide the needed review.

Lipe could not be reached for comment about the audit; he’s in the process of moving his family across the country, department officials said. Mike Kirk, the assistant chief, who served as the acting chief for nearly a year before Lipe was hired, referred all questions to the five-member commission.

“We want the commissioners to be the spokespersons,” he said.

Throughout the lengthy report, auditors suggested that the department had made errors that could be costing taxpayer dollars, but because of inadequate documentation it was impossible to know for sure.

For instance, the report said, auditors found a letter from the IRS indicating it was considering fining the fire department for its failure to submit a completed form 941 — an employer’s quarterly tax form. But it wasn’t clear if the department was ultimately fined.

“We found no record of how or if this was resolved,” the report said.

On another page, the report raised several questions about payroll, noting that three employees were paid part of their paychecks from the petty cash account and that another employee was overpaid $470 because the employee used the wrong type of time sheet.

But, the report added, “much of our review was difficult, and some could not be completed as the inadequate documentation made it impossible for the audit to ascertain all the issues associated with payroll.”

The audit also alleged the department had no inventory system in place to account for equipment — “including small and attractive assets, such as cameras, computers, cellphones and pagers” — issued to volunteers who subsequently stopped volunteering for the department.

“The district has not attempted to recover the equipment, which has an estimated value of $11,622.50,” the report says.

Philip, however, took issue with the audit on that score.

“It’s true the department has not recovered all equipment from volunteers,” he said. “But saying the department hasn’t made an effort I don’t think is true.”

In several instances, the report notes that the department’s executive assistant, who has since quit, was the cause of the problems. She took on the department’s financial duties after its chief financial officer Matt Sullivan left in 2007, the report says.

“However, she did not have the training or experience necessary to do so,” it adds.

Jason Everett, who heads the firefighter’s union at the Vashon department, said several of his colleagues in the union were aware of her lack of training and often voiced their concerns about her ability to do the job to the department’s administration and commissioners.

“There’s this litany of documented errors, and almost all of them go to this particular individual,” he said, adding, “We expressed concerns about her ability to do the job. Repeatedly.”

The commissioners, he added, didn’t respond.

“The commissioners had certain responsibilities, and, according to the audit, those responsibilities weren’t met,” he said.

But Everett added that he believes the district is finally on the right course.

“I’m confident in our new leadership, and I’m confident this isn’t going to happen anymore,” he said.

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