Cd'A prepares for audit - Coeur d'Alene Press: Local News

Cd'A prepares for audit

$365,000 was previously stolen by finance department employee

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Posted: Tuesday, December 11, 2012 12:00 am

COEUR d'ALENE - The city of Coeur d'Alene may hire the accounting firm that double checked the city's finances in previous years, including at least some of the years when a finance department employee was stealing $365,000.

But the city has implemented more financial checks and balances since discovering Sheryl Lynn Carroll stole that amount of money from the city, officials said Monday. They're recommending the city continue to contract with the accounting firm Magnuson, McHugh and Company for up to $29,500 to audit the city's books.

"I don't think you can spend the money necessary to overcome someone that chooses to take money from your business, from the city," Troy Tymesen, city finance director, said Monday during a General Services Committee meeting on the proposed contract. "What we did is we have learned from what has taken place (and) understand better an area to improve on, which is our bank relationship, and go forward."

Carroll, 52, pleaded guilty in federal court in November to six counts of wire fraud.

Since city staff discovered the financial irregularities last summer, officials have ceased automated transactions, except for payroll, and are looking to establish a separate account from which vendors can withdraw money. The process would mean authorization would have to come from the city and vending company, not one individual. It added a level of security where its bank double checks check numbers and dollar amounts as provided by the city before finalizing a payment.

Another step the city is implementing is a second level of custody over wire transfers. Carroll had been the sole employee doing wire transfers for payroll at the time.

Those steps should help improve the automated transactions process, officials said. Audits don't analyze every single financial transaction for a company, Tymesen said.

Carroll's theft involved primarily United Heritage Life Insurance Company. The insurance company didn't realize money was getting skimmed from disability coverage, so never contacted the city, and the city never went over budget to raise a red flag.

"It is a very rare occurrence for someone to pit all of the checks and balances in such a fashion that it did not trigger itself in an audit," Tymesen said. "It did not trigger the city of Coeur d'Alene running over its intended expenses in that area, and the vendor, the person receiving the money, was not looking for any more money."

Carroll stole around $365,000 through 120 fraudulent transfers from 2007 to 2012 as she worked as a payroll coordinator in the city's finance department, according to court records. She faces up to 20 years in prison and $250,000 in fines for each count. She is scheduled for sentencing Feb. 5. The United States District Attorney's office said it does not know how Carroll spent the money.

Included in the proposed audit contract is a single audit, which means since the city received at least $500,000 in federal dollars or loans, those have to be looked at separately. Last year, Magnuson, McHugh and Company performed both audits, which gave the city passing marks, for around $28,000. Last year the city solicited quotes for audit services from two other qualified municipal auditors, which came in 22 percent higher than Magnuson, McHugh and Company.

Personnel rules don't allow public employers to discuss personnel issues without the employee's consent, but Tymesen, hired in 2000, said he was not reprimanded in light of the embezzlement, nor was anyone in the finance department.

The contract proposal will go before the City Council at 6 p.m. Tuesday, Dec. 18.

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  • NoName posted at 10:28 am on Wed, Dec 12, 2012.

    NoName Posts: 253

    ...the Arthur Andersen's of local accounting.........

  • concernedcitizen posted at 6:15 am on Wed, Dec 12, 2012.

    concernedcitizen Posts: 2530

    "Last year, Magnuson, McHugh and Company performed both audits, which gave the city passing marks, for around $28,000. Last year the city solicited quotes for audit services from two other qualified municipal auditors, which came in 22 percent higher than Magnuson, McHugh and Company."

    22% of 28,000 per year paid to an insider that missed $365,000 being stolen.

    HMMMMMM, doesn't sound like much of a savings to me.

    Magnuson, McHugh and Company should be sued by the city for non-performance. Gridley should be fired for not pursuing them.

  • Truthful posted at 6:19 pm on Tue, Dec 11, 2012.

    Truthful Posts: 135

    Doesn't Idaho Code require public entities to place these our for a bid? It seems that this firm audits all the public entities in the County. Who knows they may be the MOST expensive!

  • NoName posted at 11:42 am on Tue, Dec 11, 2012.

    NoName Posts: 253

    Such a quaint little Hamlet we live in! How can one small town have so much corruption and nepotism? City employees hiring family members, LCDC operating as a private property enhancement slush fund, Police doing whatever and saying whatever they want (thank goodness for that microphone a couple of years ago) Police leaving loaded weapons in the drive through (whatever happened there?) Police hiding and covering up for their own, City and county employee tax evaders, cheaters and embezzlers...... sounds more like Chicago than CDA.

  • CClavin posted at 10:51 am on Tue, Dec 11, 2012.

    CClavin Posts: 221

    For the past few years the word INCOMPETENCE describes the following people
    -The mayor & city council
    -Wendy Gabriel
    -Mike Gridley
    -Wayne Longo
    -Troy Tymesen

    How much has the above people cost the taxpayers? I bet it is over 10 million easy. Come on folks this is your money. The citizens should push for a forensic audit, then let the chips fall where they may. I will bet you would be SHOCKED in what a real audit turns up.

  • Granny posted at 10:10 am on Tue, Dec 11, 2012.

    Granny Posts: 5

    The taxpayers in the city of CDA are not getting what they pay for. Mr. Tymesen makes $118,023 plus full benefits according to Accountable Idaho (2011). The highest paid "Finance Director" in the state of Idaho.

  • ancientemplar posted at 8:02 am on Tue, Dec 11, 2012.

    ancientemplar Posts: 1287

    Some people just never learn. Inside deal? Sometimes you get just what you pay for when you go with the low bidder.

  • LTRLTR posted at 7:52 am on Tue, Dec 11, 2012.

    LTRLTR Posts: 1171

    Tymesen is protected by the old regime as he convinced Council to take out long-term employees and use the savings to help pay for special projects. A very sly fox working behind the scenes!

  • concernedcitizen posted at 5:49 am on Tue, Dec 11, 2012.

    concernedcitizen Posts: 2530

    Tymesen and Gabriel should be fire immediately for not doing their jobs.

    McDonald should lose all compensation except what she personally paid into because she was the one directly responsible to do or ask for background check on new and/or perspective employees.

    Magnuson, McHugh and Company should be sued by the city (taxpayers) for breach of contract. They did NOT do the job in which they were hired to do.

    Gridley should be fired for not pursuing the above.

    Those of you that say government is like a business, then TREAT it like one and fire those that cost the business money.

  • voxpop posted at 5:14 am on Tue, Dec 11, 2012.

    voxpop Posts: 738

    It is difficult to seal every hole in every process but management never takes responsibility - EVER. Tymesen, I'm guessing, makes well over $100k - and for what? Carroll is the not the only one who has responsibility. Those who were paid (WELL!!) to supervise her and the processes she dealt with did NOT do their jobs and should NOT still be working for the city. City management appears to only care about covering each others rear and not requiring competence for the large salaries it pays to top employees. There should be more to Tymesen's job than back-slapping and glad-handing.

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