The city of Camas was recently issued a finding by the Washington State Auditor’s Office for failing to effectively manage its equipment rental and replacement fund. This, the auditor’s report states, could result in inappropriate use of restricted funds.
Through the equipment rental and replacement fund, equipment owned by the city is pooled together into one fund, then “rented” out to different departments depending on need.
In 2012, the city’s total revenue from user chargers was approximately $1.03 million.
According to the audit report, a review of the city’s equipment rental and replacement fund rates determined that the city has not been recovering all operating, replacement and maintenance costs. Using a rate system that was adopted by the city in 2008 resulted in under-billing from 2010 to 2012 by an estimated $117,000.
Camas Finance Director Cathy Huber Nickerson, who started working for the city in July 2013, said the rates should reflect updated costs of replacement and maintenance.
“What the auditor wants us to do is make sure the city is recovering all of the costs associated with that equipment,” she said.
According to the audit report, although new rates were adopted by the City Council in 2012, they were not implemented.
“The city did not dedicate the necessary resources to analyze and develop a complete rate structure that recovers all costs and did not implement the approved 2012 rates after they received concerns from affected departments,” the report states. “By not developing and charging proper user rates, each fund may not pay its appropriate share of ER&R fund maintenance and capital replacement costs. The city could be improperly shifting costs to restricted funds.”
Mayor Scott Higgins said a “communication breakdown” between city departments is in part to blame for the situation. He said plans are already underway for the situation to be remedied.
In July 2013, the City Council rescinded those previously adopted 2012 rates.
“This year, what will happen, is we will work as a team with all of the department heads to get those rates where they should be,” he said. “We will definitely make the changes we need to, implement the new rates, and move on from there.”
Huber Nickerson said the new proposed rates would be presented to City Council during the Oct. 7 workshop, then scheduled for adoption during the regular meeting of Oct. 21 or Nov. 4.
This is the second consecutive year that the auditor has issued a finding against the city of Camas.
After going more than 30 years without any significant state audit issues, Camas received an audit finding in the 2012 report.
During the city’s 2011 audit process, it was discovered that when costs were shared between one city department and another, those actions were not being adequately documented.
Following that finding, the city implemented a work plan that included making changes to elements of its cash reconciliation process, improving internal control procedures and reducing the workload of several key finance department employees. The estimated cost in 2012 of accomplishing these goals was $26,000.
In the 2013 report, the auditor states that “the city has resolved the condition reported in the prior audit.”