State finds faults with PUD

Draft of audit report released at Monday meeting

EPHRATA — The Grant County Public Utility District violated its own practices and state law in four different areas in 2003, according to a report the PUD recently completed by the State Auditor's Office.

A final audit report has not yet been released, but commissioners responded Monday to a draft report from the SAO. A representative from the SAO will be on hand at the PUD commission meeting at 1:30 p.m. next Monday to discuss the final report with the PUD.

According to its draft findings, the PUD did not provide adequate internal controls over contracts, made unauthorized adjustments to accounts receivable billings, provided service to users outside the scope of its authority and did not follow its own policy regarding overdue received payments.

In responding to the SAO's findings, the PUD also asked auditors for help in an investigation of the PUD's relationship with service provider Video Internet Broadcasting. The response letter signed by PUD Commission President Bill Bjork said that the commission wants to find out "if there have been violations of law or public trust," in the PUD's

dealings with VIB.

Bjork said in the letter and after Monday's PUD Commission meeting that the PUD is requesting the SAO's help and subpoena power, "To determine if any District personnel or former personnel have or had any financial or other interest in VIB which violated any laws."

"We're trying to get accountability," Bjork said after Monday's meeting, "and that accountability starts with the commission."

In its report, the SAO found that service provider VIB had a delinquent balance of about $400,000 in March of 2003, that had been delinquent for nine months. PUD staff adjusted the company's accounts receivable balance without sufficient supporting documentation that reduced the balance owed, according to the SAO.

Bjork said in the letter that the PUD commission believes the issue deserves further review, but asked that the finding be revised because he said it contained inaccuracies that could have adverse effects on the PUD's "efforts to enforce" telecommunications customer service policies enacted by the PUD.

The PUD's former management allowed service providers without any policy in effect to "accrue large debts, failed to actively pursue collection, and allowed payment plans with below market rates of interest," Bjork stated in the letter.

Bjork said that the SAO "justifiably criticized the District for these practices in 2003," which he said led to the adoption of the PUD's telecommunications customer service policies. He said the PUD is now enforcing its telecommunications customer service policies.

Those policies were the subject of another finding, in which auditor's criticized the PUD for failure to follow its own policy on collecting overdue payments. PUD commissioners passed the telecommunications customer service policies in April of 2004, but the SAO found that those policies were not enforced until September. Auditors also found that PUD payment plans have been inconsistent, saying that the PUD is charging different rates to competing service providers in violation of state law.

Bjork agreed with the SAO in the PUD's response that telecommunications staff failed to implement its telecommunications customer service policies in a timely manner, but said that staff had thought that the policy did not go into effect until September.

Bjork also acknowledged in the letter that the PUD's previous management took part in "various telecom activities which were inappropriate."

But the PUD disagreed that it violated laws that it charged different rates to competing service providers, because the commission adopted rates and policies that have always been the same for all service providers and said the finding should be modified to say that PUD management "did not pursue timely collection."

Auditors also found fault that the PUD has been providing services to users including Big Bend Community College and the Bureau of Reclamation, outside the scope of its authority. The SAO said that the PUD did not correct the condition after it was informed by its own staff. Auditors also found that the PUD is providing service to Douglas PUD without an inter-local agreement, and without charging for those services.

Bjork said in the PUD's response that service to the Bureau of Reclamation has stopped, and that the PUD has been working to obtain an agreement with Douglas PUD. Bjork also said that BBCC will be notified that the PUD will no longer provide fiber to the college for its internal use.

In a separate area, the SAO found in four instances that the PUD failed to monitor its contracting process. The SAO reported a total of $808,000 in contracts through which the PUD did not adequately monitor the contracts. Lack of monitoring resulted in various actions including contracts being signed before approval by the commission or did not go through a competitive bid process. The SAO said also that the PUD did not receive a combined financial statement opinion as required by an auditing services contract.

The PUD agreed with some findings in the area but contested others, and said, for example, that the PUD has made arrangements to have a certified public accounting firm to audit the utility's consolidated financial statements.

Bjork also spoke of accountability in the response, and said the PUD commission "is committed to take such actions as are necessary to insure that inappropriate purchasing and telecommunications activities encouraged and sanctioned by the District's previous manager and senior management staff are not repeated."

Representatives for VIB were unavailable for comment.

The draft audit report and the PUD response are both available at the PUD's web site www.gcpud.org.