COEUR d'ALENE - The city of Coeur d'Alene may hire the accounting firm that double checked the city's finances in previous years, including at least some of the years when a finance department employee was stealing $365,000.

But the city has implemented more financial checks and balances since discovering Sheryl Lynn Carroll stole that amount of money from the city, officials said Monday. They're recommending the city continue to contract with the accounting firm Magnuson, McHugh and Company for up to $29,500 to audit the city's books.

"I don't think you can spend the money necessary to overcome someone that chooses to take money from your business, from the city," Troy Tymesen, city finance director, said Monday during a General Services Committee meeting on the proposed contract. "What we did is we have learned from what has taken place (and) understand better an area to improve on, which is our bank relationship, and go forward."

Carroll, 52, pleaded guilty in federal court in November to six counts of wire fraud.

Since city staff discovered the financial irregularities last summer, officials have ceased automated transactions, except for payroll, and are looking to establish a separate account from which vendors can withdraw money. The process would mean authorization would have to come from the city and vending company, not one individual. It added a level of security where its bank double checks check numbers and dollar amounts as provided by the city before finalizing a payment.

Another step the city is implementing is a second level of custody over wire transfers. Carroll had been the sole employee doing wire transfers for payroll at the time.

Those steps should help improve the automated transactions process, officials said. Audits don't analyze every single financial transaction for a company, Tymesen said.

Carroll's theft involved primarily United Heritage Life Insurance Company. The insurance company didn't realize money was getting skimmed from disability coverage, so never contacted the city, and the city never went over budget to raise a red flag.

"It is a very rare occurrence for someone to pit all of the checks and balances in such a fashion that it did not trigger itself in an audit," Tymesen said. "It did not trigger the city of Coeur d'Alene running over its intended expenses in that area, and the vendor, the person receiving the money, was not looking for any more money."

Carroll stole around $365,000 through 120 fraudulent transfers from 2007 to 2012 as she worked as a payroll coordinator in the city's finance department, according to court records. She faces up to 20 years in prison and $250,000 in fines for each count. She is scheduled for sentencing Feb. 5. The United States District Attorney's office said it does not know how Carroll spent the money.

Included in the proposed audit contract is a single audit, which means since the city received at least $500,000 in federal dollars or loans, those have to be looked at separately. Last year, Magnuson, McHugh and Company performed both audits, which gave the city passing marks, for around $28,000. Last year the city solicited quotes for audit services from two other qualified municipal auditors, which came in 22 percent higher than Magnuson, McHugh and Company.

Personnel rules don't allow public employers to discuss personnel issues without the employee's consent, but Tymesen, hired in 2000, said he was not reprimanded in light of the embezzlement, nor was anyone in the finance department.

The contract proposal will go before the City Council at 6 p.m. Tuesday, Dec. 18.