A state audit of the Birch Bay Water and Sewer District (BBWSD) has found no issues or deficiencies with the district’s financial control procedures.
The report comes a little more than a year after former district treasurer Glenn Golay was arrested for stealing $469,000 from the district over the course of seven years. Golay later pleaded guilty to nine counts of first-degree theft and is currently serving a three-year sentence in the Monroe Correctional Complex in Monroe.
Following Golay’s arrest, the district implemented enhanced financial policies that would prevent similar conduct in the future. The district paid for an independent audit, which helped identify weaknesses in the district’s procedures. The district plans to undergo an audit every year.
“That’s something that we’ve never done before,” district manager Roger Brown said.
One year after Golay’s arrest, Brown is confident the district’s financial controls provide better oversight and transparency. But despite the improvements, Brown cautioned that there is no way to guard against all employee fraud.
“You can never absolutely eliminate [the risk],” Brown said.
Soon after the thefts were uncovered, the district hired former Blaine finance director Meredith Riley to be the district’s interim treasurer. Riley is serving a two-year term, which expires in early 2013. She is ineligible to apply for the permanent position.
As part of the enhanced procedures, district commissioners abolished the advance travel account, which Golay used to transfer tens of thousands of dollars to his personal bank and credit card accounts. The account was used to reimburse district staff for travel expenses.
The most significant change was the district’s shift to a cash accounting system from an accrual accounting system. The new system marks debts as expenses when they are actually paid, rather than when they are incurred. Brown said cash accounting lowers bookkeeping costs.
“Cash accounting is simpler and more transparent,” Brown said. “It’s not wrong to do accrual accounting, though some accountants would argue it gives a truer picture.”
Brown and Riley also developed policies to ensure no one person was responsible for reconciling checks with the vouchers approved by the district board of commissioners. Previously, the treasurer had sole responsibility for this procedure, which enabled Golay’s ability to write checks to himself.
In regards to the theft, Brown stressed the importance of the district’s insurance. The district was covered for all but $5,000 of the stolen $469,000 through the Washington Water and Sewer Risk Management Pool. The pool insures 62 water and sewer districts across the state, and the district pays around $64,000 per year premium.
“It’s absolutely essential to have appropriate insurance,” Brown said.