While the city of Wapato in Yakima County is making progress at putting its finances back in order after allegations of mismanagement over the past few years, state auditors want to see the pace pick up.

In audit reports released Wednesday, state auditors say the Lower Valley city still has “significant weaknesses” in its financial systems.

“The city has a lot of ground to make up in instituting appropriate policies and controls after our last round of audits,” said Washington State Auditor Pat McCarthy in a news release. “Nevertheless, the public expects government to be accountable at all times. I am concerned by the pace of improvement in Wapato.”

City officials, in responses included in the audit report, said new financial procedures were put in place to address past problems, and that those improvements will be reflected in subsequent audits.

“The individuals responsible for those actions are no longer employed by the city or involved with the City Council,” city officials said in the report. “The present administration has and will continue to follow state laws and city policies to get the city back on track.”

Finances scrutinized

Wapato City Hall was the center of significant attention in 2018-19 under the administrations of former mayors Juan Orozco and Dora Alvarez-Roa. Orozco, who took office in January 2018, stepped down as mayor in September 2018. Alvarez-Roa, his successor, immediately appointed him city administrator, a new position that paid $95,000 a year.

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After months of tumult, Orozco resigned as city administrator July 2019 under a settlement with the state attorney general’s office, which filed a lawsuit accusing Orozco of using his former position as mayor to unlawfully enrich himself by creating and accepting the city administrator position.

Orozco had also hired his daughter as a deputy clerk while he was mayor.

May 2019 state audits found the city misappropriated $243,000 in taxpayer fees in 2018, failed to follow bidding requirements for major construction work, and violated the Open Public Meetings Act as well as hiring and recruiting policies.  

The state released two new audits this week — an accountability audit covering the period from Jan. 1, 2019, to Dec. 31, 2020, and a financial statement audit covering Jan. 1, 2018, to Dec. 31, 2019 — which mention many of those issues.

In their response, city officials said the administrator’s position has since been eliminated, there has been a turnover in the council and that policies on nepotism are being enforced.

Auditors also expressed concerns about the city not staying within its budget and improperly transferring funds within accounts to cover expenses. Wapato, the report said, overspent by $1.1 million in 2019, and $539,353 in 2020.

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It also showed that in the 2021 budget, the city’s proposed expenses exceeded revenue by $766,969.

“The city has not devoted sufficient time and resources for developing adequate controls and oversight over financial activity,” the audit stated.

Recommendations

Auditors recommended that the city better track expenses and take steps such as spreading a shared expense between multiple department’s budgets.

City Hall staff were new in 2019 and did not understand aspects of their jobs, such as reconciling the city’s ledgers to bank statements, the auditors said.

In its response in the report, the city acknowledged that the staff turnover in 2019 resulted in “inept” bookkeeping practices, which resulted in filings that were delayed. However, they said the staff is receiving training in proper accounting procedures.

The city has also instituted other procedures to improve accountability, such as requiring two people to make bank runs, keeping cash drawers in a safe within a safe, and instituting a financial system that has multiple security figures and multiple audits to ensure accuracy.