Findings and recommendations
The audit released Tuesday by the state auditor’s office outlined 26 problems with how the city conducted its business. Those findings were:
1) Auditors found 183 checks totaling $38,585 payable to city contractors or employees that were co-endorsed by Mayor David Thompson, his wife, Wendy Thompson, or both Thompsons. The checks were either cashed or deposited into the mayor’s personal bank account.
2) Recurring payments from the general and recreation funds were made to a general contractor, a plumber and an electrician for work that could have been performed for less cost by street department employees.
3) The city’s street superintendent prepared “numerous” contractor invoices and those invoices as well as any supporting documentation were not signed by the contractors.
4) Community service time sheets submitted to the Commonwealth’s Cabinet for Health and Family Services were “grossly overstated” and inaccurate. Also, auditors identified a possible conflict of interest related to the mayor’s oversight of participants required to complete community service and the enrollment of those participants’ children in a child care facility owned by Wendy Thompson.
5) The mayor serves on the recreation board and the tourism commission, which is against the law.
6) The mayor participated in the hiring process that resulted in Wendy Thompson serving as manager of the city’s water park from 2007 through 2012.
7) An “excessive” number of free season or day passes to the water park were issued by the mayor, Wendy Thompson, and Street Superintendent Jim Baker.
8) Water park and ball park concession income, expenses and concession prices weren’t reported to the recreation board beginning in the summer of 2009 when Wendy Thompson became responsible for filing those reports.
9) Wendy Thompson did not make timely reports of restaurant taxes collected to the city, so the state was unable to determine if all returns were properly filed or if they reported the appropriate revenue amounts.
10) No sales tax returns were filed with the Kentucky Department of Revenue for water and ball park concessions for any year in which concessions were managed by the recreation board or Wendy Thompson.
11) Concession payroll appeared understated with multiple instances where no or few paid employees were present in the concession stand.
12)A list of water park equipment and supplies wasn’t maintained until the summer of 2013 when a new manager created a list of items.
13) The city didn’t collect RV rental fees consistently and ensure utilities were properly paid, with auditor’s noting the RV park host didn’t pay rental as a condition of employment, but that Street Superintendent Jim Baker also didn’t pay rent. Auditor’s also found a camper on private property adjacent to the RV park that had connected to the park’s electricity — the state was unable to determine if the camper owner was paying for the electricity used.
14) The mayor suspended rental payments for the Old Town General Store building because of needed roof repairs. The state recommended the recreation board ensure all agreements are in the best interest of taxpayers by implementing fair and consistent rent.
15) The city didn’t receive vending machine revenue from May 2007 through April 2013 although purchases were made.
16) The city has only received three payments for aluminum sold by the recycling center since January 2010.
17) The city didn’t receive revenue from the sale of metal appliances collected by the street department.
18) The city failed to get bids for purchases of more than $20,000 from an asphalt company and a gasoline wholesaler.
19) The city used unnecessarily restrictive bid specifications in its purchase of two used vehicles for the police department.
20) The tourism commission failed to adequately oversee the repairs and remodel of the H.H. Owens Home.
21) The tourism commission awarded the highest bidder a contract in its purchase of decorative aluminum fencing for the Civil War Interpretive Park without justifying the rejection of the low bid.
22) The city needs to improve internal controls over gasoline purchases by reconciling purchases with actual usage.
23) The city’s gravel stockpile isn’t adequately safeguarded from unauthorized access.
24) The tourism commission lacks adequate segregation of duties such as opening mail, preparing deposits and preparing financial statements — although the report noted no record keeping errors.
25) The city lacks adequate segregation of duties over general fund and recreation fund receipts — with the report again noting no record keeping errors were found.
26) The street superintendent and assistant street superintendent used city-owned vehicles to drive to their residences although this use was not noted as a fringe benefit on their W-2 forms.
27) The city didn’t properly declare city-owned vehicles as surplus prior to sale and title transfers to purchasers were delayed. Also, the city sold a motorcycle for which it had no title and the city no longer has a camper currently titled to the city.
28) Amounts paid for two land purchases “significantly exceeded assessed values.”