Youth program lacked adequate cash controls

A youth program at the Northeast Community Center lacked adequate cash controls over some $472,000 in youth activity fees in 2003, the state auditor has found.

Problems at the Northeast Youth Center occurred after the program experienced rapid growth in its programs and the number of participants subsequently exceeded the ability of the center to handle accounting through its former manual system, the audit said.

City officials said no theft was involved, but that the audit is intended to close any potential lapses that could open the way for such problems.

The audit, which was made public on Tuesday, involved a broader examination of the city’s compliance with accounting laws and practices. A separate report released last September on the city’s financial statements and its compliance with federal laws had no findings, said Chief Financial Officer Gavin Cooley.

The finding involving the Northeast Youth Center was the only problem uncovered by the audit. “In most areas, the city complied with state laws and regulations and its own policies and procedures,” the audit report said.

The auditors also noted the city had worked to resolve findings from previous audits, including the 2002 report, which had three separate findings.

The Northeast Youth Center is a city parks and recreation department program that operates before- and after-school youth activities as well as summer youth activities. Programs are primarily located at the Northeast Community Center, which leases space to the youth center. A separate nonprofit organization, also named Northeast Youth Center, operates as a partner to the city to offer programs.

Auditors found that billing, receipting, depositing and posting to customer accounts were not adequately segregated, and management oversight was not adequate. No one outside the billing, depositing and posting had been assigned responsibility to ensure that all delinquent accounts were entered into the city’s accounts-receivable system.

Receipt books issued by the park administrative office were not reconciled to individual receipts to ensure completeness of amounts received, the audit said. Also, the park department relationship with the nonprofit organization lacked a formal contract.

City officials said a key employee had been on an extended leave in 2003. An experienced bookkeeper has since been hired to comply with audit recommendations. Plus, a contract is being developed between the parks department and the nonprofit youth center.

“We responded immediately,” Cooley said of the audit finding. “Now we’ve got controls in place.”

He said the fact that the state had only one finding from the city’s extensive operation was a positive sign for the city’s financial management.

Last March, a 6-year-old boy was left unattended at Harmon Park by youth center staff. The center retained its child-care license following a state investigation of the incident.