BELLINGHAM - A small water utility in northeast Bellingham has already improved its accounting after receiving a warning letter from the State Auditor's Office.
Two issues of concern raised by the state for fiscal years 2010 and 2011 weren't considered more serious "findings," in part because Whatcom County Water District No. 7 was making progress toward compliance after the two-year accountability audit, said Kelly Collins, deputy director of state and local audits.
"There's a lot of upgrades and changes being made there, and it sounds like they're slowly making progress toward getting better from an accounting standpoint, as well as operations," Collins said.
Both concerns were a consequence of the water district's small size, Collins said. The three-member board of commissioners hired an outside company, Water System Services, to manage the district's system. The board gave the company's owner, Dave Olson, the title of district manager.
The board did not review Olson's work sufficiently to ensure that district funds were not misspent, according to an Auditor's Office management letter dated Dec. 6, 2012. Olson reviewed all invoices, including those written for his business, the letter said. There was no evidence of mishandling of funds.
The Auditor's Office was especially strict during 2010-11 because the water district was making major improvements to its system, replacing water mains, adding a tank and rebuilding water pumps, Olson said.
"I was overseeing more work than is usually the case," he said.
Olson's company did none of the construction work, which was all awarded through competitive bidding, he said.
Secondly, the Auditor's Office asked the district to change its practice of having one part-time employee read meters, do the billing, receive payments, make deposits and adjust accounts - all without adequate oversight. The district was unable to detect missing money quickly enough, the letter said.
"Every district that has one person gets the same standard response," Olson said. The board of commissioners enacted a policy just this month requiring a third party to verify the district's revenue reports, he said.
The water district has not had a finding in an accountability audit over the past 10 years, the Auditor's Office said. The district serves customers east of Britton Road and had revenues of $443,000 in 2010 and $459,000 in 2011.