The Northwest Museum of Arts and Culture and the Eastern Washington State Historical Society improved their accounting system since 2016 but still failed to manage some contracts and properly track all donations, a recent report from the state auditor says.
The board also improperly paid its new director a per diem when he first came to Spokane and approved some expenses it shouldn’t have, the auditors contend in a separate letter.
The museum director, Wesley Jessup, said the problems with the contracts and donations were left over from previous management, and the staff was already making some changes the auditor’s office recommended.
The per diem he was granted – $150 per day, for a total of $12,900 – was approved by the assistant attorney general that represents the museum, Jessup added.
“Our board of directors received written approval from the attorney general’s office throughout that process,” he said in an email.
Jessup was hired in March 2017; the audit covers the museum’s fiscal year, from July 1, 2016 to June 30, 2017.
Auditors who went over the books of the historical society, which operates the museum, said managers didn’t follow all state rules and policies to monitor its contracts. They paid some vendors without having contracts in place, and one contract exceeded the limit for the museum. Some payments weren’t supported by receipts, and some employees hadn’t attended proper training. The museum didn’t have a designated contract manager, auditors said.
Some donations to the separate non-profit museum foundation on behalf of the museum weren’t properly accounted for, they said. Half the donations designated for the museum were deposited into the foundation’s account, and a third didn’t have adequate documentation to verify the donor’s intent.
Jessup said those problems are being addressed by adopting the state policies, requiring any contract more than $10,000 to get an attorney general’s office review, and scheduling training for employees. The museum now has a designated contract manager, he said.
The foundation has stopped accepting donations on the museum’s behalf unless they are going to a special endowment fund, and the museum is working on better internal controls on donations, its chief financial officer told the auditor’s office.
The museum recently completed a strategic plan and the corrective action suggested in the audit “dovetails with improvements we were already making,” Jessup said.
Jim Brownell, the audit manager, agreed with Jessup that the team found far fewer problems with the historical society and museum than a team in 2016, which was responding to a whistleblower’s complaint. That previous investigation found what he termed “serious issues” that involved moving money among various accounts, subsidizing a vendor’s financial losses, improper use of foundation funds and having state employees working for the foundation.
Staff of the museum were helpful to the auditor’s staff, Brownell said. Although they believed they had the legal authority to structure Jessup’s salary and per diem the way they did, “we evaluated the legal criteria we had … and didn’t find anything that permitted that.”
The museum doesn’t face any penalties for the audit or the letter, Brownell added: “We’re not a regulatory agency.”
They’ll check to see if improvements are in place in the next regularly scheduled audit.
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