Columbia audit uncovers problems No major cash woes but sloppy work in villages reported


After a three-month audit of financial records of Columbia's 10 villages, the Columbia Association may tighten the reins to better account for the $1.3 million it gives annually to the neighborhoods.

A confidential report said the audit found sloppiness but no major financial wrongdoing in nine of Columbia's villages, said some officials who are familiar with the report. Recommendations contained in the report would make villages more accountable to the association and maintain consistent records.

The $40,000 audit commissioned by Columbia Association and begun in March was spurred by a police investigation of a village manager in Dorsey's Search, the 10th village. A February audit by the Columbia Association turned up evidence that about $100,000 might have been misappropriated from Dorsey's Search over several years, according to two sources familiar with the confidential document.

Anne Darrin resigned Feb. 27 as village manager after village board members questioned the accuracy of her financial statements. She had served for 10 years.

Darrin did not return repeated telephone calls.

The new audit recommends tighter checks and balances between village managers and their boards, such as an independent monitoring board; hiring independent auditors at least once every three years; using more sophisticated accounting software; and prohibiting use of village credit cards for personal entertainment.

"This has made us aware of the gaps in understanding how the villages work," said Norma Rose, chairwoman of the Columbia Council, the elected body that oversees the homeowners association that governs Columbia. "We want to build procedures that will avoid mistakes."

The 10-member council will see that the recommendations are carried out after the new association president, Deborah O. McCarty, replaces Padraic M. Kennedy next month. Kennedy has been president of the association for 26 years. The quasi-governmental group has 800 employees and an annual budget of about $44 million.

Monitoring the relationship between the association -- often called the "mother ship" by village managers and council members -- and the villages is one of McCarty's first tasks.

The association's contract with the villages runs out at the end of the month.

Columbia's developer, James W. Rouse, structured the village-center system and believed in keeping control at a grass-roots level. The Columbia Association and the villages interact much like the federal and state governments.

Each village elects a governing board. The board hires a full-time manager, whose salary can range from $23,000 to $45,000, to run daily events at the village center.

The centers receive grants from the association and, under the direction of village boards, are free to spend the money as they see fit.

But that system -- which put the financial responsibility in the hands of part-time board members who meet every two weeks -- was established when the villages were small. Some of their budgets have grown to $300,000.

In the past five years, none of the villages has been audited by Columbia Association staff members or an outside auditor.

The villages are not required to have bookkeepers, though only Dorsey's Search -- where Darrin kept the books -- did not have one.

The Columbia Association audit suggests that villages:

Obtain board authorization before village managers purchase items for the centers.

Keep copies of cash receipts, security deposits and payments in the village office. According to the audit, some villages did not keep copies of receipts, which sometimes were not recorded.

Require the signature of the village manager and the village board chairman on checks. Some council members have said they are concerned about the ease with which village managers can write checks. In Dorsey's Search, some village board members said they were unaware of things the village center bought or what they were used for.

End the use of village credit cards for personal purchases. In some villages, according to council members, managers became lax in recording personal meals and business meals they charged on their village credit cards.

Require that villages use generally accepted accounting principles. The association is supposed to get quarterly and yearly financial statements, but, until this year, those did not have to be in the same format, making it difficult to track expenses.

Offer every new member of a village board a training session to understand the fiduciary responsibilities, and educate village staff members who were unfamiliar with accounting principles.

The difficulty, many council members and village board leaders said, has been detecting problems.

Since the questionable records surfaced in Dorsey's Search, Bob Conors, the village board's chairman, said he has become more strict about seeing all financial statements and co-signing checks. "There's no magic in [keeping things clean], it is just a matter of paying attention," he said.

Pub Date: 7/05/98

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