Leetsdale Audit Cites Financial Issues, Makes Recommendations

An independent audit of 's borough affairs addresses more than 20 issues regarding its practices, including credit-card spending and cell-phone use.

Ambridge-based auditor Mark Turnley's report to council, dated Jan. 6, addresses dozens of internal issues, points out “deficiencies” and refers borough officials to follow-up action.

Council Vice President Mike Bajsec, who also is chairman of the financial committee, said many of the deficiencies highlighted in the 14-page document are currently being addressed.

“We can say with authority now that the matter has been looked into and appropriate steps have been taken,” Bajsec said.

Bajsec requested the audit in August after a concerned-citizens group raised questions about financial and ethical dealings in borough operations.

Citizens for Leetsdale, a group led by resident and former council member Joe McGurk, began questioning the borough’s spending practices last year, including employee use of borough-owned credit cards and cell phones, and the practice of giving pay advances. McGurk has announced plans to run for a seat on council in the May 17 primary.

The audit spells out several weaknesses involving the borough's internal controls, such as its lack of purchase orders.

Leetsdale has 12 full-time and eight part-time employees. The borough provides 12 employees and council members with Citizen Bank credit cards, 10 of which have $1,000 credit limits. Council President Roger Nanni had a credit card with a $6,500 limit, while co-Secretary Liz Petalino had a $5,500 limit.

The auditor pointed out that purchases, such as restaurant-related charges, were made on the numerous credit cards between December 2009 and August, but those charges weren’t supported with receipts. Nor were details provided supporting the purchases, he noted.

During the audit, missing receipts were turned in for the auditor’s review, but the credit card bill had to be paid without that documentation so as not to jeopardize the borough’s credit status.

“The lack of submitting receipts to the business office to support credit card purchases, and in certain instances, the lack of full details with regard to the business purpose of each purchase is not a prudent business practice and potentially violates the spirit of the Borough Code…as it pertains to the payment of bills…,” Turnley wrote.

Two pages of the audit were devoted to Christmas-party expenses. The audit noted the borough spent $7,178 for food, decorations and prizes related to a Christmas dinner, where about 70 people were expected to attend.

But three additional holiday parties that later took place for the public works department, the Leetsdale Garden Club and the police department, cost the borough a combined $995.

Turnely said it was unclear who attended both the individual social functions and the borough’s annual Christmas dinner. Spending for separate dinners “was not a prudent expenditure of borough funds,” Turnley wrote.

Other issues addressed in the audit were:

• Lack of receipts and lack of control when it came to the use of borough credit cards, including the purchase of a $775 gun by the former police chief for what he thought was part of his annual uniform allowance and payment of an outstanding $1,000 Verizon bill of a family member to expedite an account error. Both amounts were recovered from payroll deductions.

• Pay advances dating back to 2007, which the auditor recommended discontinuing or recovering the reasonable amount in the next pay period

• Employees and council members have routinely exceeding monthly allotments for cell phone charges. Turnely recommended the borough provide an agreed-upon phone reimbursement rate to all employees, which greatly reduces the borough’s loss.

Suggestions included:

• Reducing seven air cards, or wireless modems, down to two, which would save the borough about $215 per month. The concerned-citizens group had questioned their use, noting that the use of the wireless devices were not discussed or voted on at a public meeting. The auditor, noted that the air cards are contemplated as an annual budget cost as part of general operations and have been approved as part of the general fund budget.

• Adopting a purchasing-order policy to control expenses and amending a policy regarding community-room rentals.

• Maintaining control of borough property, such as computers issued to council members and other staff.

• Discontinuing the use of all but one or two credit cards and reducing the spending limits.

Turnley also recommended the borough maintain an anti-fraud policy and track financial reporting as a means to control spending.

Turnley noted in the audit that a limited staff is responsible for payroll, check-writing and invoice payments. He suggested those employees attend yearly conferences to brush up on payroll-related laws and information.  

Bajsec said the borough is working to improve some procedures. Turnely noted that the borough has presented policies and procedures to address the accounting issues to help strengthen the borough’s internal controls.  Credit cards, for instance, are now signed out and returned with receipts.

Councilman Osman Awad said the tracking system allows a cardholder to take a card and return it with a history sheet of what the person did with the car.

“So if somebody’s going out of control, you can track them too,” he said.

Awad said the independent audit was a smart move on the borough’s part.

“It’s a good step. It raises a lot of awareness,” he said.

Thanks to the audit, Basjec said, the borough can move forward as it works to regain the public's trust. 

“I don’t think that we could’ve moved forward without doing it, I think it was necessary,” he said.