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Mayor: "Beginning to Feel More Comfortable with Where Things Are"

The City of Covington is several steps closer to moving beyond the embezzlement that shook the foundation and confidence at City Hall.

At Tuesday night's city commission meeting, the agenda was dominated by items related to moving forward with stricter oversight and more transparency in place.

The commission also accepted the findings of its annual outside audit, performed by the first time by Cincinnati-based Clark, Schaefer, Hackett & Co. The city named previous outside auditors in a wide-ranging lawsuit that targets banks, insurance companies, and even family members of former finance director Bob Due who stole $793,000 during twelve of his fourteen years at the helm of the department.

The lawsuit seeks to regain all of those missing funds.

Due, 64, will be sentenced on April 17 after pleading guilty to charges related to the embezzlement. Kenton County Commonwealth's Attorney Rob Sanders is recommending fifteen years while Due's lawyer will ask for ten years. Due could ultimately spend less than three years in prison if he is paroled.

As Due awaits his fate, his former trusting employer, the City of Covington, continues its effort to rebuild the public trust and to construct a stronger wall around its finances while allowing for better public transparency. 

In addition to the audit presentation, city commissioners heard a first reading of an ordinance establishing a transparency policy, an action recommend by the Mayor's Task Force to Restore Public Confidence, a group created in the wake of the Due scandal. Meeting information, contact information, annual budget and audit reports, taxes, fees, and ordinances will now be available in a better manner on  the city's website.

The ordinance also includes "a fair and transparent process of hiring employees", labor union contracts available to the public upon request, meeting minutes, and public evaluation of contracts awarded through the procurement process.

The commission will likely adopt the ordinance at its next meeting in two weeks.

"The task force felt it was important that the commission publicly state what it was committing to to be transparent," City Manager Larry Klein said. The ordinance could also be expanded in the future, he said.

Meanwhile, the city commission approved the outsourcing of payroll solutions and services. A request for proposals from qualified companies will now be issued, a recommendation by State Auditor Adam Edelen, whose office issued a scathing review of the city's finance department.

"This is something we were calling for in the original audit committee," said Commissioner Steve Frank. "We couldn't possibly do this as well as a professional."

"Thanks for bringing us current to every other city in the state," Commissioner Michelle Williams said.

A requirement of Edelen's examination of Covington City Hall is the issuance of a response by the city. Klein presented the Corrective Action Plan in February and the city commission approved it on Tuesday.

"A lot of these items were actually corrected when we got the state auditor's report," Mayor Sherry Carran said. "Since (new finance director) Lisa Goetz has been on and the assistant finance director and (finance department information technology director) Lisa Desmarais has come on, it's been amazing what's been accomplished here."

"I think we're beginning to feel a little more comfortable with where things are."

There is still work to be done, however, and issues were outlined by Kerry Roe of Clark, Schaefer, Hackett.

Though the city received a clean audit, "Exactly what you're looking for," Roe said, two material weaknesses were identified.

One was related to the correcting of financial reports and another to the segregation of duties in accounts receivable, issues also outlined in the state auditor's report.

Additionally, there is no accounts procedures manual, the city's process for notes receivable lacked assessment of collectibility, and the tax collection process did not have ideal segregation of duties.
 
"On the positive side, we did not find any instances of non-compliance with laws and regulations, so that aspect of the report was very positive," Roe said.
 
"This is the first time we've used Clark, Schaefer, Hackett for a year-end audit and they've done an amazing job for us and I know you said you were paying closer attention because of the things we've gone through," Carran said. "It was the best audit that I've ever seen for the city."
 
Written by Michael Monks, editor & publisher of The River City News
 
Photo: Kerry Roe of Clark, Schaefer, Hackett presents its audit to the City of Covington on Tuesday/RCN