COEUR d'ALENE — Acting on an audit that raised financial concerns about the Kootenai County Fairgrounds, county commissioners on Monday unanimously decided to expand the volunteer fair board from seven to nine members.

"This (board expansion) is one of the recommendations from the Clerk's Office," Commission Chairman Dan Green said. "It would be a benefit to have more people on the board with different skill sets. I believe that the additional financial expertise would be appropriate based on some of the audit findings of the clerk."

Green said he hopes commissioners can appoint the two additional fair board members by mid-August. The North Idaho State Fair is Aug. 24-28.

Green said the audit raised multiple financial concerns about the fairgrounds.

"Their QuickBook numbers did not match those of the external auditor's balance sheet," Green said. "They were loaning people money in advance of paychecks, and that's a concern. I think that some business practices were being applied that are not up to standard with what is being applied elsewhere in the county. A lot of public dollars go through there. The audit is raising some questions."

According to draft minutes of a July 13 county commissioner meeting, Commissioner David Stewart, the fair board liaison, called advancing pay to employees via draws "unacceptable."

Another concern is with the slow response to needed Americans with Disabilities Act (ADA) improvements at the fairgrounds, Green said.

"ADA is not being addressed quickly enough as far as the BOCC (board of county commissioners) is concerned," he said.

Green said he doesn't believe the financial practices at the fairgrounds are criminal.

"We just need better reporting and policies that are consistent with other county departments," he said.

The fair board also acknowledges that changes are needed, including training on how to read government financial statements, budgeting, oversight, fixed asset tracking and preparing for external audits, the draft minutes state.

"(Mary Richter, an outside accountant) informed the commissioners that the fair board intended to hire a full-time bookkeeper with formal education this fall due to the fair's growth outstripping the capabilities of the current staff," the minutes state. "She advised that by December 2016, formal policies and procedural manuals would be assembled as well as formal risk assessment documentations."

Fair board chairman Gerald Johnson said the fair maintains $100,000 to $150,000 in savings, the minutes state.

Johnson and Fair General Manager Dane Dugan didn't return phone messages prior to deadline on Monday night.

A June 14 memo from county finance officials to the fair board and county commissioners summarizing the internal audit of the fairgrounds states, "It appears most financial controls related to the annual August fair are in order. However, the internal audit team identified several practices of concern ... inadequate financial oversight and improper financial record-keeping.

"Few financial controls seem to have been installed since the fair embarked on revenue-producing activities other than the annual August fair. The fair board has vested the manager with such complete authority that there are almost no financial checks and balances. In all interviews, we heard a great deal about trust, but little about verification."

The memo states that some employees have taken draws against their future pay since 2005. It states that Dugan has taken 16 draws since 2012.

"Seventy-six percent of his paychecks include some draw repayment," the memo states. "We believe taxes have been properly withheld, but documentation of those draws is casual."

The fair board has broader responsibilities than the county's other volunteer advisory boards in that it hires the general manager and other fair staff members. Therefore, the employees work for the fair board, not the County Commissioners' Office.

By state law, the fair board is given oversight of the North Idaho State Fair. County commissioners earlier this year passed a resolution allowing the fair board to manage the grounds and facilities all year, but issued Shawn Riley, the county's building and grounds director, the task of overseeing large capital projects at the fairgrounds.

"This board (of county commissioners) wanted to take a more active approach, especially with maintenance and management of facilities," Green said.

The fair board assists the general manager in setting the annual budget and making decisions on personnel, safety issues and fair entertainment. The fair board acts in an advisory capacity to the county commissioners. The county commissioners appoint fair board members.

Richter said she agreed with Stewart that an internal audit team should spend more time observing the fair processes, the minutes state.

Green told the fair board the county commissioners may decide to give more direction to the board regarding how the county's contributions would be spent.

The county increased its funding amount to the fair from $75,000 to $150,000 last year. The upcoming budget requests $150,000.