Newport city report rebuts claim that receipts were missing from city credit card purchases

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NEWPORT, Minn. - The Newport city administrator has denied there was misuse of municipal funds and says the city’s fiscal oversight has improved dramatically, according to a report responding to a citizens group that raised questions about missing receipts for purchases made with city credit cards.

The Newport Citizens’ Organization, or NEWCO — a group that earlier this year had pushed for the formation of a financial advisory board similar to the city’s planning commission — said publicly in October their review of the city’s recent financial statements, obtained through a series of public data requests, showed municipal employees had not submitted receipts for an average of nearly $25,000 per year in purchases made with city credit cards.

City Administrator Brian Anderson disputed the assessment in a memo to the City Council earlier this month, saying all purchases were documented by Newport’s credit card statements and that the actual dollar figure of purchases without submitted receipts is far less than NEWCO alleged.

All but 4 percent of city credit card purchases — $1,270 worth — in 2012 have had accompanying receipts submitted to city administration, according to the report.

But the percentage of receipts not submitted rises steeply in preceding years, the city’s review showed. In 2011, 51 percent, or $15,720, of receipts were not submitted; in 2010, 65 percent, $17,250, were missing; in 2009 the figures were 73 percent, or $18,400; in 2008, 61 percent, or $14,850; and in 2007, 49 percent, or $13,600.

Anderson attributed those figures to the fact that, prior to October, Newport did not have a formal policy requiring city employees submit receipts with all city credit card purchases. City department heads were responsible for reviewing purchases, he said.

“In reviewing the statements, I don’t believe there was any misuse of funds from 2007-12 as the credit card statements clearly state where the purchases were made and most of the larger expenditures are from conferences, lodging, or other governmental agencies,” Anderson wrote in the memo to the City Council.

Due to the lack of a city policy, Anderson’s memo reads, “submitting receipts was not a consistent practice with the city until 2012.”

The allegations were dropped on the city in emails that began circulating in late September and exploded into public view at a rancorous council meeting Oct. 4. Mayor Tim Geraghty dismissed the allegations — leveled with fewer than 35 days remaining before Election Day — as politically motivated.

“I thought the timing of this was curious,” Geraghty, who won re-election on Nov. 6, said last week.

An annual audit conducted by public accounting firm MMKR gave a generally positive review to the city’s finances. But it found — and has in past years, as well — that the city does not have an appropriate level of segregation of duties, meaning Newport doesn’t divide accounting tasks among employees as widely as preferred.

That finding is common among small cities, the auditor said in the March report. In Newport, the issue has been exacerbated by cuts to staffing levels that shrunk administrative support staff at City Hall from three employees to two.

Anderson has said new accounting software introduced last year will help the city, and Geraghty said stricter internal controls will, as well.

“We’re better off going forward,” Geraghty said.

By comparison, the city of Cottage Grove requires that receipts be submitted for all purchases made with city credit cards.

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