KENNEWICK — An independent audit requested by the Kennewick Irrigation District recommends the district treasurer be trained "in basic skills necessary to perform his functions," that the agency eliminate district credit card use and improve its accounting practices to better track its money.

The assessment by LeMaster and Daniels was posted Tuesday on KID's website. The certified public accounting business was paid $65,000 to review KID's finances by examining its books from 2006-09.

Treasurer Clark Haueter "lacks the necessary accounting background to fully perform the basic functions required of an accounting department manager," the report said.

"As such, the district has not been provided with accurate, complete and timely financial reports, nor has the district benefited from its substantial investment in new accounting software," it added.

Haueter, who was hired for the $100,000 a year treasurer's job two years ago on the recommendation of former district manager Doug Grover, was not available at the KID office this week.

The 12-page report was released April 14 but not mentioned at the public portion of Tuesday's KID board meeting. It was discussed in the executive session, however, said John Jaksch, board president.

Immediately after the executive session, the KID directors voted to pay another $15,000 to LeMaster and Daniels for additional professional services to implement the report's recommendations and policy changes.

"We will get up to 150 hours (from the accounting company) to get us up to speed," Jaksch said.

Jaksch would not comment on Haueter's status.

He could not be reached at the office or at a home phone number.

The board voted last November to get the independent audit done to help newly hired district manager, Chuck Freeman, get a better understanding of KID's finances.

The directors planned to spend up to $24,000 for the audit, but after selecting LeMaster and Daniels, agreed to expand the scope at more than double the cost.

Dale Walter, a retired accountant appointed to the KID board for one year in 2008 but not elected for a new term in 2009, said the audit validates what he long believed.

"This report surprised me because accountants normally are very conservative and wouldn't lash out like this unless (KID's treasurer) is very inept," Walter said.

As a board member, Walter frequently criticized Haueter's actions. Walter continued to do so after leaving the board, challenging Haueter's financial reports to the board for more than a year during the public comment portion of KID meetings.

"I've been involved in at least 100 audits and this is the worst example I've seen for results," he said.

Even so, Walter said the LeMaster and Daniels audit was just a start.

"Based on what was exposed, you have to audit further to get a clean bill," he said.

The audit recommendations include:

-- Requiring routine and detailed monthly financial reports for the district board, with the accounting division to close out books once a month.

-- Reconciling bank accounts monthly. KID has been as much as four months behind on this.

-- Requiring monthly investment reports and having established authority for all investment transactions.

-- Not allowing receipting of cash and posting of payments to be done by one person.

-- Not allowing processing of invoices, accounts payable and writing checks for payment by one person.

-- Establishing inventory counts at least quarterly.

-- Following a strict pre-authorization purchase-order policy to ensure that none is signed "after the fact" of a purchase. This is to eliminate potential fraudulent or illegitimate purchases.

-- Eliminating the district's nine credit cards because there have been problems with lack of receipts and unauthorized card use.

"When support was requested for one credit card transaction, the accounting technician reported that the supporting packet for the entire month's credit card activity was unaccounted for," the audit report said.

-- Requiring documentation supporting pay increases and performance reviews.

The auditors said the district's investment CDs were being cashed out by the accounting division to cover operating expenses, yet there was no documentation to support the authorization for the transfer of funds.

Also, the auditors said lack of documentation made it impossible to reconcile KID's reserve fund "or perform a detailed analysis of disbursements."

-- John Trumbo: 509-582-1529; jtrumbo@tricityherald.com