Treasurer, County Council president clash over the meaning of new audit HARFORD COUNTY

December 06, 1992|By Sherrie Ruhl | Sherrie Ruhl,Staff Writer

There's one audit, but two very different interpretations.

Jim Jewell, Harford County's treasurer, said the audit proves county government is doing an excellent job managing the county's finances.

Jeffrey D. Wilson, County Council president, said the audit proves the administration is trying to stash money where the council can't get to it.

One source of contention is a $675,000 escrow account in the county's water and sewer fund.

At least $40,000 of that had been sitting in the escrow account since 1981, said Edward J. Powers, a manager at Coopers & Lybrand, the firm that performed the audit.

Developers typically put money in escrow accounts to guarantee they will perform certain jobs -- putting in a road or, in the case of the $675,000 fund, installing water and sewage lines. Once the work is finished to the county's satisfaction, the money is returned.

But county administration officials say they have lost track of which developers put up some of the $675,000 and for what purpose.

The auditing firm recommended that the county analyze the account, decide what to do with the money, then come up with a way to monitor escrow accounts regularly. Mr. Powers estimated the county is not adequately monitoring about 20 percent of all escrow accounts.

The audit and accompanying management letter, for the fiscal year that ended June 30, were released formally to the County Council Tuesday night.

A spirited discussion, with the auditing firm in the middle, ensued.

Mr. Jewell and Larry Klimovitz, the county director of administration, took turns defending the administration.

Both sides agreed the treasury department has made enormous improvements in accounting procedures since a 1991 audit, the first performed by Coopers & Lybrand. The County Council, which technically hires and pays for the audit, retained the national accounting firm to replace a local accountant who had audited the county's books for 17 years.

Mr. Wilson likened the county's treasury to a pantry where some jars -- in this case jars filled with money -- get pushed to the back of a shelf.

Comments like that left the Mr. Jewell visibly exasperated.

"There are no hidden buckets or jars full of money. There is no money being squirreled away," he said. "We are the ones who gave the auditors the itemized list [of escrow accounts]. The auditors recommended that we review it in a more timely fashion, and we agree."

But Mr. Wilson countered: "Now that the accountants are doing a better job, it is easier to find out how much money the administration has stashed away." Because of improvements in accounting after last year's audit, he said, "It is much easier to find out exactly what is going on."

Mr. Wilson asserted that the latest audit proves County Executive Eileen M. Rehrmann has created "cushions" of funds throughout the county government in addition to the $13.7 million surplus with which the county ended fiscal 1992. The county's 1992 operating budget was $136.8 million.

Councilman Robert S. Wagner, R-District E, said he worries that the county's problems tracking escrow accounts indicate poor management.

"Does this imply that work was not done?" he asked. "Did developers agree to put in sidewalks and walk away without completing the work?"

He suggested more frequent audits might be needed.

Mr. Jewell said he agreed with the auditor's recommendation that escrow funds should be more carefully managed. He said he had found one account worth $1,900 in the fund, dating to 1973.

But, he said, most of the money in the controversial $675,000 escrow account had come into the fund within the last three years.

Money that had been in the escrow account longer than that can be hard to track down, Mr. Jewell said.

"We are dealing with situations where the people who made the agreements are long gone, and we are having trouble uncovering the files over at public works," he said.

"The treasury department's job is to collect the money and hold it until the work is completed and some of those projects, especially developments, can take years."

Mr. Wagner said he was also concerned that the auditor's spot check of commercial accounts found 36 of 55 were undercharged, costing the county $129,000.

The auditor's report also found the county spent only a portion of the money it had for new roads and resurfacing in the 1992 fiscal year.

Councilwoman Joanne S. Parrott, R-District B, pounced on the audit's report of unspent highway dollars.

"This is part of the shell game," she said, claiming the county hides money that could be spent repairing roads.

Mr. Klimovitz, the county administrator, said some highway money was "deliberately frozen" because the county expected to lose it because of anticipated state cuts.

"These are monies we knew were intended to be cut," he said. "It is not prudent, wise or good management to have spent them. We froze those funds deliberately."

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