An internal audit of the Flathead County Fairgrounds Department has turned up numerous shortcomings, including security concerns and discrepancies in the way cash is handled.

County Internal Auditor Cindy Dooley delivered the findings to the county commissioners and the Fair Commission on Dec. 11. The internal probe is part of a routine system of individually auditing county departments separately from the county’s overall audit, County Administrative Officer Mike Pence said.

Dooley’s assignment was to evaluate the day-to-day operations of the fairgrounds management office, observe operations during the 2009 Northwest Montana Fair and offer useful recommendations.

She studied five key areas: petty cash and change funds, cash receipts and deposits, storage rental and event invoicing, building safety and safeguards and premium payout software and documentation.

Cash transactions are a routine part of the fair operation, but Dooley’s report found a number of deficiencies, including:

n A surprise count of the cash used for premium payouts found a shortage of $457.

n Cash is not being deposited on a timely basis during the off season.

n The county general ledger shows $25 in petty cash for small expenses, but a surprise cash count revealed no petty cash at the fairgrounds office.

n Several cash counts during the fair revealed shortages in the cash register tills that were not recorded properly on the till recap.

n Multiple cashiers used a single cash drawer, creating a lack of responsibility for the till cash. Some daily recap sheets lacked signatures.

The internal audit also found that revenues weren’t recorded at gross value for some food booths. Currently food-booth commissions are collected on the honor system based on a percentage of the sales a booth receives, but there’s no standardized form for the booth operator that shows gross sales less any expenses that the county incurs, such as meals for Fair Commission members, Dooley said.

Regarding security, the audit found no security camera in the safe room to record transactions during the fair. Security cameras have been installed in the gate-receipt booths but weren’t functioning at times during the fair, Dooley said.

Security also was lacking in the fair office area where tighter controls are needed, such as pass keys issued to fair officials only.

“All others wishing to gain entrance should be escorted in,” Dooley stated. “All fair staff should be issued identification to be worn during the fair.”

The design of the area for advance ticket sales and premium payouts is not ideal, the report noted. The setup for credit-card sales processing also could be improved by providing a machine at each cash register.

The audit took issue with the current premium payout system, saying it’s not efficient and has significant risks.

During the 2007 fair, a separate bank account was set up to pay premiums by check, but the account was not reconciled by the County Treasurer’s Office and the remaining account balance, more than $9,000, was not deposited back into the county’s account until June 2009 when it was brought to Fair Manager Jay Scott’s attention.

Last year the fair began paying premiums by cash, but remaining cash of about $6,000 was kept in the fairgrounds safe and wasn’t deposited back into the county’s account until April 2009. The audit makes recommendations on how to improve all of the shortcomings it cites. Responses from the commissioners and Fair Commission will be included in the final audit report.

 Features editor Lynnette Hintze may be reached at 758-4421 or by e-mail at lhintze@dailyinterlake.com