KILLEEN FINANCES

Killeen’s very first audit of its 10-year-old city credit card program used by senior managers and other top leaders shows inappropriate uses of public money, according to results released Tuesday.

The procurement card program began in 2008, and throughout its early years until about 2012 was frequently used by leaders at the top and other managers for breakfast or lunch meetings, holiday parties, coffee and kitchen supplies, and for special occasions to recognize administrative assistants, according to the report composed by City Auditor Matthew Grady.

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Matthew Grady

Matthew Grady

“Whether intentional or unintentional, executive management’s collective attitudes and practices in the workplace result in a ‘tone at the top’ that invariably filters down through the ranks of an organization,” Grady said in the report. “An internal control system cannot function effectively without the support of executive management, who must not only enforce an organization’s internal controls, but live by them, as well.”

The results of the city’s latest audit poured salt on wounds still fresh from the management audit of city finances that culminated Sept. 5. That was conducted by Houston-based auditors McConnell & Jones, an outside firm, at the request of council members and residents who were concerned about city financial practices. The firm issued 26 recommendations.

The city’s financial practices previously were questioned over the past nine years by two public accounting firms conducting annual external audits. Gersbach, Franklin & Niemeier of Temple, and Weaver in Fort Worth found violations in the way the city handled grant money.

Grady in his Tuesday report argued that top leaders, who were not named, set a detrimental tone early in the program’s history by failing to staff the program with a full-time administrator, and by failing to set a good example for city staff.

The types of expenditures documented are not uncommon in the private sector, but “they are generally frowned upon, and usually prohibited in the public sector,” he said.

The expenditures amounted to less than $10,000 over several years, the report said, adding that although the amount was not extravagant, “(the expenditures) were inappropriate uses of public dollars, and were symptomatic of an attitude of permissiveness on the part of senior management.”

Additional findings included:

• In the program’s 10-year history, no evidence of any p-card privileges revoked for misuse

• Public money safeguards were inconsistent or not in place, such as separation of duties

• No real p-card program administrator from 2008 to 2011

• About 40 percent of purchases didn’t require preauthorization

• Policies did not require statement reconciliation

• No system for tracking violations

• No training program on how to use city purchasing cards

• No refresher training program for purchasing violations

The report highlighted several steps already taken or underway to correct problem areas, including reducing the number of p-cards in circulation, developing training materials, increasing face-to-face meetings to discuss purchasing, and amending city policy.

City Manager Ron Olson, shortly after beginning work for the city in February, asked Grady to perform the audit based on several factors, including the number of p-cards in circulation and past violations documented by the previous city auditor.

See Thursday’s edition of the Herald for more on what was found and what’s to come. Go to http://bit.ly/killeenfinances for more #KilleenFinances coverage.

asierra@kdhnews.com | 254-501-7463

(4) comments

THUGNIFICENT KILLED ME

I don't believe anything other than money has gone missing. How much? No one knows, but my guess its more like $500,000 (or more) than the lousy $10K alleged.

Alvin

This is the personal opinion of this writer.

@eyewatchingu: and @timebandid: I'm sorry, but I to differ with uou in the respect that I don't share with you the confidence that our new city manager can and will exercise good judgment and can some of these worse offenders that are now a prt of the city administration, such as our city legal department, Ms. Kathy Davis, the one who it was pointed out that threw away many of the files that could have led to offensives by the city and certain key individuals, or the fact that our past city chief of police, Mr. Dennis Baldwin, moved from being the chief of police to the interim city manager, when the full time city manager to an assistant city manager, and I imagine being over the new chief of police, and to the other assistant city manager, Ms. Farris. These two positions contribute nothing to the operation of the city except a recycle of the city administrative personnel of this city council, the one that was responsible for the millions of dollars of debt this city is responsible for. Also I would suggest that our city manager also take another long, hard look at the millions of dollars that this city is responsible for, especially the new city water plants that are going to serve the area outside of this city's boundary's, and the increase in cost of that venture.

We need Transparency in the way that this city is being operated and a more forceful initiative as to who this city allows for the operation of this city including the KEDC operation and the Board of Directors. We need to establish a format in that no city council member, and mayor, is allowed to be on the KEDC Board of Directors. This method of operation is wholly contingent on the separation of the members of the city council and the members of the KEDC. Or, perhaps the establishment of, as stated by the city manager, a Super Majority requiring a vote of 6 of 7 city council members to pass any ordinances that this city council has jurisdictional responsibility over. And this 4 vote quorum simple majority is bad for this city in that with the 4 district council members being sought just by the members of the district I feel is detrimental to the overall operation of this city, and subsequently should all be from the city at large so as to increase the total vote of each at large city council member.

To say that 'these violations were not more extensive and that the city manager will be responsible for misuse of city credit cards, I believe, is an understatement. Don't get lulled into thinking that these small change misuses is all that it takes.

And I disagree with the statement that 'he has shown real determination' in closing the loopholes. I would expect that he follow through with more large discrepancies, such as the aforementioned city water plants with all of the exposures that confront this city. We have in the neighborhood of $300 Million that is owed by this city and the actions of the budget getting bumped up by millions, in my opinion, is not the way for a city to be ran. What's next on the budget addition agenda.

This has been the personal opinion of this writer and nothing shall be used, in context or without or changed in any way without first notifying, and receiving explicit approval from this writer.
One of the 4.58 % who voted.

timebandid

I am happy that to hear that these violations were not more extensive that this. With Ron Olson in place as our City Manager, I expect these types of misuse of credit cards to be stopped. He has shown a real determination to tighten such past loopholes and believe that this will be no exception. With him and Mr. Grady working together on financial transparency and accountability, I believe that we are now on track to bring confidence back to each taxpayer of this city.

eyewatchingu

So far three large suits coming up for the city of Killeen. City of Killeen will see a large chunk of that budget gone for awhile.
still want to see what was spent on the trip to Washington, I also want to know is how munch in kick backs Fleming is getting, by using Businesses to hold her meetings in for the free publicist, having her done to advertise for a business, the discounts she is banking when she shops. Lets not just stop with her, its time we start looking into each one.
Its time each and everyone is looked at with a fine tooth comb.

When will the public be able to see the spending from the Washington trip?

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