Audit finds problems with Turlock chamber’s accounting of city money spent to attract tourists

Turlock City Council members will hold a special meeting Thursday to go over an outside audit of spending of city funds to promote tourism by the Turlock Chamber of Commerce.

The city-hired accountants added up $340,820 in charges since 2009 that lacked proper documentation or were for expenses they felt did not comply with the Turlock Convention & Visitors Bureau contract. The agenda notes the chamber is on the hook to pay back the city all audit exceptions.

Interim Turlock Chamber of Commerce President Paul Wright said he had just received the report and would be meeting with the chamber’s executive committee to prepare for the council discussion.

“We will be doing everything we can to work with the city and the council to move forward and get this taken care of,” he said.

Wright declined to discuss the audit findings or possible consequences for the chamber, saying such comments would be premature.

“At this point, it makes much more sense for us to meet with our accountant to go over the audit and make sure we understand exactly what it’s saying,” he said.

The chamber led tourism marketing for the city for 24 years until the city ended the arrangement May 3. City staff members reviewed expenses under the contract to close the books and found more than 100 potentially troublesome expenses. The city hired Kemper CPA Group to do an independent audit for $15,000.

“With a responsibility to our taxpayers, the Turlock City Council closely and carefully reviews each city department’s expenditures. Outside groups awarded city contracts should not and will not be treated any differently,” said Mayor Gary Soiseth in a statement.

“I hope that the transparency provided by this independent, third-party audit leads to significant improvements in the oversight of our city’s funds,” he said.

The chamber received one-third of the city’s revenue from special taxes paid by motel guests. Starting in 2009, the city added payment for expenses classified as administrative costs, capped at slightly less than $100,000. It is the administrative costs that have received the greatest scrutiny.

According to a yearly breakdown by Kemper, starting in 2011, cash transferred to the chamber for its administrative costs exceeded the cap. But in a notation that is not fully explained, the additional funds were reclassified or marked as occurring in the following year, with the final numbers nearly on target.

On Dec. 31, 2013, for example, the visitors bureau ledger deducted $34,230 in administrative costs as prepaid, ending the year slightly under budget in its administrative costs. The same day, however, $34,230 was posted as an administrative expense of 2014.

The amount of cash transferred to the chamber each year for administrative costs – before being reclassified – was $105,430 in 2011; $123,230 in 2012; $148,730 in 2013; and $162,456 in 2014. It is unclear from the chart if the rising totals reflect spending increases, or if overages bumped into the next year inflated the amounts.

An attached schedule of questioned expenses shows some entries had purely procedural problems, such as having no budget category. Other payments appear to show mingled administrative costs; for example, the visitors bureau account paying the chamber’s Internet bill or buying ink for chamber printers.

Dozens of entries for credit-card charges say there were no receipts to detail what was spent. Noted as questionable, though technically allowed, was the chamber’s practice of charging the city more than it cost to create city maps and visitor directories, on which the chamber also profited from advertising.

This story was originally published September 22, 2015 at 10:05 AM with the headline "Audit finds problems with Turlock chamber’s accounting of city money spent to attract tourists."