WatchCatKathleen's Blog

Watchcat Local:

Read on to find out about a very interesting meeting that was not covered by the newspaper -      At the January 13, 2010 Lexington Public Library Board meeting, Mayor Jim Newberry asked, for the second time since he became mayor, for the Library Board to give library money, $363,000, to the city.  He talked about what a great partner the library is to the city and implored the Board members to “share the pain” of the city budget crisis.  He did not acknowledge that the library had already cut their budget over 4%  in July, 2009 since anticipated revenue was down.

The relevant thing about this request is that it would be illegal for the library to give money to the city. Library funding is established by state law and can only be used for library purposes.  The Mayor had asked for library money shortly after he was elected and was turned down.  Yes, the law could be changed, but it must be followed now. The library does have a reserve fund and works hard to add to it every year.  This fund is for emergencies, future libraries, and expansion of services.    

Does it make sense for the city to look to penalize an agency that has good fiscal policies and stays within its budget by asking it to solve the city budget deficit? Why would the city continue to ask for money from the Library when it would be illegal for the Library Board to give it to them?

The good news is that the Library Board turned down the mayor’s request, unanimously!

Worldcat Global:

With the increased competition for public dollars for all types of public services, it is increasingly important for public libraries to maintain their visibility as a critical service.  Author, Richard Florida in his two books, The Rise of the Creative Class and Who’s Your City? How the Creative Economy is Making Where you Live the Most Important Decision of your Life, talks about the elements necessary for a creative city.  I would urge all library staff and interested citizens to read these books.  Then, discuss them and decide how the public library can help make your city the place people want to be.

Watchcat Local

The Library Board has agreed to mediate with me on February 22.   Hurrah!

Comments on the Herald Leader article of 12-30-09.

Although I appreciate the free publicity for my watchcatkathleen.com blog, the paper wrongly stated its purpose. The purpose of the blog, which is clearly published on the right hand side of the page is, “to share ideas and thoughts on issues facing public libraries…”.

In hard times such as we are in currently, it is easy to criticize actions that might be done differently in todays economic climate.  Has the paper questioned the value of Lexington’s Sister City program?  Many city officials and prominent people travel abroad with this program at taxpayers expense.  Lexington has four Sister Cities which allows cross cultural experiences and raises the city’s profile among people of other countries. This is important to increase Lexington’s profile as an international city. Why then the constant depiction by the paper of my International Federal of Library Association work as “trips to Europe and Africa”? 

 I consulted with the Library Personnel Committee prior to running for and being elected to a position on the metropolitan Library Section of IFLA and received encouragement.  The paper on the other hand says, “trips to Europe and Africa… with little oversight provided by the Library Board”.  It is frustrating to have legitimate, approved, in budget travel depicted merely as  “trips”, and with no purpose given.  At three IFLA meetings(over a five and one half-year period), I presented a juried paper and shared information about the library and the city. For several years, the informational pamphlets were provided to me by the Sister City program.  

The Lexington Public Library is a significant part of Lexington’s cultural heritage as is the University of Kentucky and the international horse industry. As part of continuing the excellence of the Library, I hope in better economic times, that future Library Director’s have the chance to meet and learn from colleagues  across the globe. Due to my participation and encouragement, the Metropolitan Library Section of IFLA was considering Lexington as a  site for a future meeting which would have had a positive economic impact on the city.

12-30-09

Great News!  The Library Board has agreed to mediate!

12-28-09

Just a few days after I posed the question, “If the Lexington Mayor cuts life and safety services like fire stations, what could happen to libraries?”, City Councilman George G. Myers suggested changing the state library law on funding saying, “consideration should be given to reducing the designated amount (for the library) from 5 cents to 3 cents, with the difference designated for public safety”.   See article Lexington Herald Leader,December 27, 2009, page  D1, “Library budget needs oversight,” by George G. Myers.

This cut would be approximately $5.75 million out of the library budget of $13.1million.  What could that cut mean to the people of Fayette County? Even if all of the six libraries were cut to 40 hours, that would not be enough to balance the budget. There could be several alternative reductions. At least two libraries would have to close completely puting approximately 50 people out of work. This would also cause a reduction in the city’s occupational tax income.  Another alternative would be to purchase no new books, cut all subscriptions and access to databases, but that would only save $1.5 million.  There would be no other way to reduce the library budget by almost 40% than to lay people off and close  libraries. Waiting lines for computer use would double, computer classes would be cancelled, specialized programming would be eliminated and only skeleton service would remain.

Library use goes up dramatically when the economy is poor.  People depend on the library’s resume service and job centers to help find jobs. The library board in spring, understanding this growing need for public library services, increased the library open hours and expanded job center services. The timing for a suggestion to cut library services could not come at a worse time for the people of Fayette County.

The library has not been unaffected by the city budget shortfall as Mr. Myers claimed.  Since the library funding is based on a percentage of the property tax collected, as the amount of taxes collected has decreased, so has the library’s budget. The library’s total budget for travel and staff development for 82 employees and board members in 2009 was less than $50,000. Since the library revenues have decreased for 2010, the Board has reduced even that small amount.

“Great cities are based on great libraries.”  “Kids who read, succeed”  ”What would any of us have been if we had not read a single book?”  These are a few thoughts to consider to help understand the importance to a community of quality library services.

Last week, the Lexington Mayor decided to close one of the firestations as a cost cutting measure.  Eventhough it was only for one day, and the purpose was to save money, ponder this question.  If life safety services are starting to be reduced,  what will be the fate of public libraries?

I understand this is a very long post but it is my response to the city audit which omitted important information and contained numerous factual errors.  the page numbers cited refer to the city audit posted on their web page. I also submitted this report to the city internal auditor.  To date I’ve received no response from the city or the library board.

To:                  Lexington Public Library Board

From:            Kathleen Imhoff

Re:  Report on Errors and Comments on City Audit Report Issued December 3, 2009                                       

 Date: December 8, 2009

 Following is a point by point commentary on the City Audit Report. 

 Background.  Page 1.  The allegations regarding the operational and financial activity of the Lexington Public Library (LPL) were based on anonymous comments to the Kentucky Auditor of Public Accounts.  At no time during the nine-month period of the investigation was the Executive Director/CEO (Director) informed of what the allegations were.

 Scope and Objectives.  Page 1-2.  The period of detail review was stated to be January 2006 through April 2009, but many of the comments predate and postdate this time period.  The general control objectives for the audit were to provide reasonable assurance that:  “financial transactions, particularly credit card expenditures, at the LPL were reasonable and appropriate and that purchasing procedures were reasonable and appropriate.”  However, no definition of the terms “reasonable and appropriate” is included in the report.  Since neither the Director nor the staff were consulted about the purpose of the financial transactions, it is difficult to understand how an outside agency could determine if the expenditures were reasonable and appropriate for a public library.

 Statement of Auditing Standards.  Page 2.  It is stated that this audit was “in accordance with the International Standards for the Professional Practice of Internal Auditing”.  During the period the city’s Office of Internal Audit studied, the library had yearly audits conducted by well-respected auditing firms – Ray, Foley, Hensley and Company and Mountjoy and Bressler.  In 2007, Hensley found that there were some problems with the credit card purchases.  After their report, these problems were corrected.  The Chair of the LPL Audit Committee issued a public statement that the problems did not refer to the Director. Mountjoy and Bressler performed the library’s 2008 audit.  They noted in their report that the problems from the 2007 audit had been corrected.

 Mountjoy and Bressler is the same audit firm that the city uses for their city audits.  Mountjoy and Bressler found none of the items that are listed in the 2009 city audit report.  They use the same Standards for auditing.  How can two auditor groups come up with two such different audits?

 Audit Opinion.  Page 2.  The city’s audit found, “the controls and procedures did not provide reasonable assurance that the general control objectives were being met.”

 There is no mention made of the changes that were made after the 2007 audit, nor the procedural changes that were put in place by the Director and staff when a new Financial Officer was hired.  There is no differentiation on the controls in place in the early years under a lax Chief Financial Officer who left giving no notice and the controls put in place after he left library employment. 

 During part of the period of this audit the Lexington Public Library Foundation (“Foundation”) financial activities were handled by the library.  After the prior Chief Financial Officer left, the Director worked hard with the Foundation to separate their fiscal operation from the library.  The separation of financial activity was achieved by a mutually developed contract that went into place in January, 2009.  Some of the items that are mentioned as problems are related to the co-mingling of Foundation and Library funds and fund accounting.  It was recognized by both the Board and the Foundation that the separation of the fund accounting and moving it to the Foundation, solved the problems that had previously existed.  There is no recognition in the Audit Report of this improvement, which took place prior to the audit.  LPL had no control over the expenditures or credit card activity of the Foundation Director.  The spending on alcohol noted in the Audit Report was related to events that were open to the public as either receptions or ticketed events for the Foundation, such as the Night of Literary Feasts.  The report makes no attempt to separate credit card activity for the Foundation as separate from the library.  The purchases of beer and wine were related to these events, and the money spent on these items was later reimbursed to the Foundation by way of the donations collected as a result of the events.

 Priority Rating Process.  Page 2-3.  The city audit staff assigned “a qualitative assessment of the need for corrective action.”  These priorities were assigned by the city staff using criteria in place for the city departments with apparent disregard for any differences that might exist in the running of a library and its services and the running of the operation of city administration.

 SUMMARY OF AUDIT FINDINGS

 Finding #1 Excessive Credit Card Activity

 The report shows totals of credit card activity for a period of almost six years.  Using their figures of 26 people with the most activity for this period, an average usage per card would be $3,000.  What measure did they use to determine that this is excessive?  There is a reasonable explanation for each of the charges. However, they did not ask. 

 Prior to April 2008, some of the supporting documentation for credit card purchases was not as detailed as it should have been.  After the departure of the Chief Financial Office in April, 2008, this changed.  There is no mention of this improvement in the report. 

 In Nov. of 2007, the Chief Financial Officer was informed verbally and in writing that he was to “authorize payment only for items covered in LPL policy.  Do not pay items just because they have a P.O. and/or an invoice.  Any items, particularly credit card purchases, must meet the LPL Policy on Credit Card Purchases.”  He continued to ignore LPL Policy on Credit Card Purchases.  He left in April 2008 giving no notice.  Many staff always gave detailed support of any credit card purchase including memos from the Director authorizing the purchase.  Others, including the Head of the Library Foundation did not.  To state, “The sheer volume of activity and the limited amount of detail support, made the overall analysis of the business legitimacy of the transactions problematic,” implies that it was deficient through the entire period of the report, is inaccurate. It was the standard procedure that restaurant receipts did not list who ate what.  The Director always listed the purpose of the expenditure, the number of people attending and the valid business purpose.  That information was listed in the information provided to the auditors and was also listed on the library public website.  It is hard to understand what was problematic about the nine-month analysis.  

 The auditors did not ask for the detail about purposes of expenditures which they say they did not have.  On three separate occasions, the Director sent letters saying that she would be willing to provide explanatory information for the audits, but the requests were denied.  As the audit time frame lengthened, the Director continued to express her willingness to provide information and answer questions, but she repeatedly was denied the opportunity.

 The Liquor Barn purchases were for the Night of Literary Feast and other Foundation fundraisers which were open to the public.  The reconciling documents to determine the profit made at the events would show the detail of the purchases.  The Foundation events added expenditures including alcohol but all events produced a profit.  Since January, 2009, the Library is no longer responsible for the credit card reconciliation or the accounting of the Foundation, so the issues of alcohol purchase and lack of adequate supporting documentation, identified in the audit were corrected prior to the audit.

 The pizza expenses were primarily incurred as part of a successful multi-generational, family emergent literacy program funded by the Knight Foundation.  These ten-week, three-hour programs for families in the lower socio-economic strata included a dinner as part of the program.  These pizza expenses were covered from the grant funds.  This program is one of the most successful literacy efforts that the library runs.  Another pizza expense was during the library flood when staff and volunteers worked from 7:00 a.m. to 11:00 p.m. to help minimize the damage to the wet materials and prepare them for freeze drying.

 The report claims “expensive” meal purchases for Board members and staff at the American Library Association meetings.  Instead of each person eating separately, the board and staff in attendance had a meal together and the joint charge would be placed on the Director’s card.  The number of people and usually even their names would be indicated on the charge.  It is stated by the auditors that these meals were “expensive (and presumably) travel related meal purchases.”  A few minute check by the auditors would have found the approved travel forms for all of the people who ate these meals.  Instead of checking on this sometime during the nine months of the audit, they include statements that imply wrongdoing.

 The report is critical of the library for the number of vendors where credit cards were used, “965″.  What is the reasonable amount of vendors to be used?  This number equates to only 16 vendors per month.  Is 16 vendors a month a reasonable amount?  If the period after the Chief Financial Officer left had been analyzed, a noticeable drop in the both the number of vendors and the number of changes would have been discovered, particularly if the Foundation expenses had been subtracted.  The library had no control over the expenditures of the Foundation.

 The report makes no mention of the fact that the supposedly excessive charges were in budget and were approved.

 Effect:  Page 4.  The Director does not agree with the audit claim that after April, 2008, there was extensive spending activity with insufficient accountability and documentation requirements.

 Recommendation: Page 4.The audit recommends eliminating all credit cards.  They recommended procurement card instead.  It is not possible to neither make airline reservations nor rent cars with procurement cards, nor is it possible to purchase specialized books with procurement cards.  Many independent book vendors only will allow a credit card purchase.

 In January 2009, prior to the audit, the library staff and the Board looked into the possibility of reducing the number of credit cards, using procurement cards and tightening the travel procedures.  The number of credit cards was reduced to 5.  The travel use of credit cards was finely delineated also.  Meal per diem, reasonable hotel cost and reasonable transportation cost parameters were all established by the administrative staff as part of the revised travel procedures which are currently in effect.  The discussion of these changes is reflected in the minutes of LPL, but is not reflected in the audit.

 Library Board Chair Response:  Page 5-10.  The detailed responses on pages five through eight show the hard work of the staff, the Director, and the Board to review and improve the credit card policy and procedures prior to during the audit.

 On page 10, the Library Chair (Chair) states that the Library plans to enact policies and procedures which clearly specify the allowable of expenses for Library funds.  Much of this was accomplished prior to the Director leaving.  The new policies included the items that are in paragraph 2 on page ten.  The policy that staff had to prepay their credit card expenses prior to being reimbursed was also put in place prior to the Director leaving.  This new procedure already included the prohibition of purchase of alcohol with Library taxpayer funds.  These actions were accomplished prior to July 14, 2009, but neither the auditors nor the Chair acknowledged.  A quick review of the records would include the credit card reimbursement checks that have been issued to the remaining credit card holders, including the Director.  Although continuous improvement is a good idea for any public organization, it seems unusual that the Chair would appoint a new Committee to review and address changes that already have been made in 2009 and then not implement them until May 1, 2010.  

 Finding  #2.  Variable Pay Program Appears to be an Emolument. Page 10-12.  The Library Board in 2003 asked the candidates for the Director Job if they could implement a pay for performance plan.  When the new Director was hired in July 2003, she was tasked with developing and implementing a pay for performance pay plan.  Working with the Human Relations Office, the library’s employment lawyer at Stites and Harbison (the library’s law firm), and advisers from the Kentucky State Retirement System for two years, a pay for performance plan was developed.

 Effect:  Page 11.  The city auditor states, “The Variable Pay program…has the appearance of a bonus-based compensation plan, which would fall under the definition of an emolument.   Emoluments are not an allowable form of employee compensation within taxpayer funded entities.” 

 Since it was the Mountjoy and Bressler auditing firm’s first year to audit the library in 2008, their staff spent a lot of time interviewing library staff and the Director about the policies and procedures of the library in order to familiarize themselves with the library and its operation. Remember this is the same firm that the city uses for its audits.  The Variable Pay program was discussed in detail with them.  Mountjoy and Bressler did not consider the plan an emolument nor did the prior library auditing firm of Ray, Foley, Hensley and Company.  Many other libraries throughout the country that are taxpayer-funded use the same or similar pay for performance plans.

 Recommendation: Page 11.  “The Library Board should re-examine this program to determine if it is a legally acceptable form of compensation…”  The Library Board, its law firm, the Library Director, and the Kentucky State Retirement System all thought it had been determined to be legally acceptable.

 LPL Board Chair Response:  Pages 11-12.  The Board had vetted, through its counsel, that the program was not an emolument.  They plan to seek an Attorney General opinion to sort out this difference.  This action should put this issue to rest.

 Finding #3. Appearances of Conflict of Interest.  Pages12-14.

 Condition-OCLC & SOLINET: Page 12-13. The audit implies that the Director had a conflict of interest in her dealings with SOLINET and OCLC.  This is another case where a few requests for information and documentation from the Director easily could have cleared this matter up.

 The Director was elected and served on the SOLINET Board prior to the Director’s employment at LPL. It is unclear why the Director’s service on this board would even be mentioned in the city audit since it was prior to 2003 and did not happen during the time period of the audit.  While at LPL, the Director attended, along with other Library employees (the Head of Technical Services), the annual meetings of SOLINET at LPL expense.  She was LPL’s voting delegate.

  SOLINET is a non-profit membership cooperative.  There is no honorarium or other compensation for attending SOLINET annual meetings. While the Director was on the OCLC Members Council and attended the SOLINET annual meetings, one-day expense was reimbursed by SOLINET to LPL for hotel expenses.

 All librarians who serve on the Board would also purchase services from SOLINET. Since it is a membership cooperative, all of the Board members are from libraries that use SOLINET services.  There would be no conflict of interest in the Director serving on the SOLINET Board, but she did not do this while working for LPL.  The services that SOLINET provided to LPL during the time the Director attended annual meetings were only available from SOLINET.  As a cooperative organization, SOLINET saved LPL money and improved library services over the way the library provided services when they did not participate in the cooperative.

 It would appear if attending SOLINET annual meetings was a conflict of interest for the Director; it would also have been a conflict for the other members of the LPL staff who attended the SOLINET meetings for the six years in question.  There are no Outside Business Relationship Forms in the personnel files of other staff members that attended SOLINET meetings.

 The Director was elected to serve on the OCLC Member’s Council.  OCLC paid only for transportation, meals and the hotel for the seventy global members who attended the Council meetings.  There were times that LPL paid in advance for transportation and meal costs.  LPL records clearly show that OCLC reimbursed LPL for these costs.  OCLC is a non-profit membership cooperative and all of the Council Members are from libraries around the world that use OCLC services.  There is no conflict of interest in serving as a OCLC Members Council member.  There are over 28,000 libraries, museums and cultural institutions that are members of OCLC.

 In November of 2008, the Director was elected to serve on the OCLC Board of Trustees, which is not the same as the OCLC Members Council.  Prior to running for this office, the Director consulted the Personnel Committee of LPL.  They recognized it for the honor it was, and never mentioned any potential conflict of interest.

 In January, 2009, LPL Chair, Larry Smith and LPL Board members Ralph Coldiron and Buzz Carmichael, attended the OCLC President’s Breakfast at the American Library Association mid-winter meeting in Denver, Colorado.  Their expenses for attendance at the mid-winter meeting were paid by LPL.  The Director introduced the three LPL Board members to OCLC officials, including the CEO and they listened to his presentation, which explained the nature and the current status OCLC.  The CEO’s presentation included recognition that the Director had been elected to the Board.  At the next LPL Board meeting when the three Board Members made their report on their attendance at the ALA meeting, Mr. Carmichael included the fact that the three of them had attended the OCLC breakfast and what an honor it was for the Director to have been elected to the OCLC Board of Trustees.  At no time did anyone, including these three Board Members, bring up any potential conflict of interest.

 The OCLC Board of Trustees is the governing board of OCLC and has fiduciary responsibilities with this organization, which is a non-profit membership organization.  The OCLC Board of Trustees is made up of up to 15 members, six of which are elected by the membership from libraries, museums, and cultural organizations.  The other members are people such as college presidents, i.e. David Roselle, CEO’s of major companies, i.e. Wendy’s, and people with specific expertise in technology.  Since members of this Board receive a compensation for their service on this Board, the Director attended all of the meetings on her own time.  It would be easy to review her vacation and personal time records to determine this fact. Being elected to the OCLC Board of Trustees is considered one of the highest honors for a librarian and their library.

 Condition-Outside Consulting Work:  Page 13.  The Director uniformly worked ten to twelve hour days.  The Library consulting project in which she was involved was with respect to the first public library in Muscat, Oman.  Oman night is our day.  That is why the Director’s communication with that library was done during the day.  Review of her computer records would have also indicated that she uniformly answered LPL emails at four in the morning.  The Director informed the LPL Personnel Committee of her work on this project.  There were very few e-mails sent during the day. 

 Effect: Page 13.The auditors saw this as a conflict of interest.  They quote a policy that was put in place by the library that requires an Outside Business Relationship Form.  The form is currently on the LPL’s S-Drive but there is no date on the form.  The Director believes a review of senior staff personnel records would disclose that no forms have been used prior to July 14, 2009.  There was no such form implemented when the Director was working at the library so it follows that there would be none in her personnel file.  The procedure in effect when the Director was working for the library was that the Director would check with the Personnel Committee about work that might create a conflict or require international travel.  In all cases, the Director consulted with the Personnel Committee and the Personnel Committee determined there was no problem or conflict.  In the case in 2007 and 2006, when the Director was a speaker at a library conference or meeting, she took vacation time to attend.  Again, those records easily could be checked.

 The laptop computer, which the Director was provided in 2004, was given to her as part of her contract negotiated with the Board and was expressly given for both business and personal use as was the cell phone the library provided her.

 Recommendation:  Page 14.  The Board should improve its process on outside business relationships.  The Director agrees, there was no implementation of an Outside Business Relationship Form when she was there.  It also should be understood that a contract with the Director might contain different provisions than those that regular non-contracted staff.

 LPL Board Chair Response:  Page14.  The Director agrees that there were no Outside Business Relationship Forms in her personnel file, as no such form was implemented for any LPL staff at the time of her employment.  The Director agrees that it is good to add additional clarification in this area and include the outside business relationship form in the LPL new hire packet.

 Finding #4 Deletion Activity in Violation of Instruction to Preserve Records. Pages 15-18.

 Condition:  Page 15.  The Director was informed not to delete any information on her computer.  The Audit report purports that much information was deleted.  The Director and the independent report of the Forensics Firm hired by the Library Board shows that the Director did not manually delete any files.  The Director did not violate the requirement for record retention.

 Effect:  Page 15.  The auditor ascertains that the Director “demonstrated a clear disregard for direct instructions to preserve all records”.  This is untrue, and can be proved by referring to the Appendix IX in the auditor’s report.  The report by Andy Cobb, PhD, Certified Computer Examiner, AC Forensics, states,” After completing my examination of the desktop and the laptop, (of the Director), I have found no evidence that the files on the desktop purported to be deleted between 4/25/2009 and 4/28/2009, including the 485 files purported to be manually deleted by the City Auditor, were manually deleted.  It is my opinion that these files on the desktop and several on the laptop, were not manually deleted, but were shown as deleted by an automated process…”  He goes on to detail his findings, which exonerate the Director and are contrary to the stated findings in the Audit Report. 

 It is unclear why the auditors would have chosen to omit this information from their report and instead report findings that are in direct contradiction to the forensic expert’s report.

 Recommendation:  Page 16.  They recommend that there be compliance and “significant disciplinary action for non-compliance.”  The Director agrees.

 LPL Board Chair Response:  Pages 16-18.  The Chair reconfirms the Forensics Report, which demonstrates that there was no violation of the requirement for record retention.  More importantly, it also confirms that the files ”while marked by the file system as deleted, those deleted files were still available to the user in the same location before they were reported to be deleted.  THUS, THE DELETED FILES WERE NEVER ACTUALLY DELETED BUT WERE ALL STILL RETRIEVABLE.  These characteristics suggest the deletion was performed by a defragmentation program.”  The Director never deleted the files, either manually nor by instigating a defragmentation program.  There were at least five library staff members who had access to the Director’s computer and passwords.  The lack of adequate security measures indicates there could be many staff members in addition to these five. 

 Finding #5. Employee Computer Use Policy Needs Improvement. Page 18.

 Condition: Page 18.  The audit noted numerous file names that appeared to be inappropriate in nature.  The independent expert reported that “no illegal images existed”.

 Effect: Page 18.  The auditor said that the viewing appears to be a violation of LPL Policy.

 Recommendation: Page 18.  A recommendation was made that LPL should more clearly define acceptable personal use of LPL computers.  The Director agrees.

 LPL Board Chair Response:  Pages 19-21.  The Chair asserts that the Director’s laptop was to only “perform Library work, both at home and while traveling”.  The Director disagrees. 

 The computer and a cell phone were provided in 2004 for both business and personal use.  This can be verified by then Board Chairman, James Lee, and was re-verified by 2009 Board Chairman, Burgess Carey.  This is one of the areas where the negotiated provisions of the Director’s contract differ from policies applicable to staff.  If the Board’s understanding of the reason for providing such a laptop “…was so that the former Executive Director/CEO would have access to a computer in order to perform library work, both at home and while traveling,” then why was there no mention in the Chair’s comments or the Audit Report about the use of the laptop by the Director for writing two books, for her work for classes she taught, for personal genealogy material and other personal items that are on the laptop?  The Director was not asked to sign an E-Mail and Computer Usage Agreement because the computer provided to her was for personal and business use.  Also, the library Electronic Communication and Internet Use Policy does not address viewing of adult materials; it only addresses “downloading, transmission and possession of pornographic, profane or sexually explicit materials.” There is no evidence by either the auditor or the Library Chair that proves any of those actions were taken by the Director.

 In February, 2009, the Director noticed that adult materials had been viewed on the laptop.  She talked to several people who might have had access to the laptop at that time, including workmen.  After February, there was no other such activity. The Director asserts that she did not use either of the computers in that way.  The Library Board’s lawyer has stated to the Director and her lawyer that her computer had been tampered with after the audit began.  The Director and her lawyer also were told that the Director’s computer had been compromised by five other staff computers.  The Director’s Office was also broken into on three separate occasions after the city audit began.  This breaking and entering was reported to the Lexington police department.

 There is no basis for concluding that the adult materials, reconstructed from inactive files on the Director’s laptop, were the result of any action or activities on the Director’s part.  This critical information appears not to have been provided to the city audit staff.

 Finding #7. Questionable Expenditures Noted in General Ledger.  Page 22. 

 Condition:  Page 22.  The audit questioned 27 transactions from the general ledger since they did not appear to have a business purpose.  The auditors did not allow LPL staff or the Director to explain the expenses. Of the 27 “questionable expenditures,” 4 were for service awards (which the auditors said were okay in their report), two were for small gifts to retiring Library Board Chairmen, three (for $3,615, $3,615 and $3,615), were for promotional calendars which were part of the $450,000 three-year library promotion budget as was the charge for the promotional umbrellas, one was for bus passes for staff members for the year, several  charges were for staff activity items and events sponsored and paid for by the Friends of the Library at no cost to the taxpayers.  Several expenditures were for lunches for all day staff training workshops.

 If staff or the Director had been consulted, many of the supposedly “questionable expenditures” could have been easily explained and would no longer be questionable.  One expenditure listed was a wrong charge and a refund was given. 

 The expenditure that is hardest to understand as a “questionable” expense is the $1,262, to Weight Watchers. Everyone is aware of the huge rise in health care costs.  The staff and the Director worked diligently to find ways to reduce health care costs.  One of the ways to reduce costs was by sponsoring a weight loss program in the library reimbursed employees half the cost of the Weight Watcher program upon the employee’s successful completion of the course.  This was a part of LPS’s wellness program and a way to reduce health costs.

 Effect:  Page 22.  The audit alleged that these expenses did not reflect a prudent use of taxpayers funds.  They can be explained and shown to be prudent.

 Recommendations:  Page 22.  The Board should develop clearer policies.  The Director agrees.  The audit says that expenditures such as gifts should be minimal and “be limited to activities such as Service Awards.”  Four of the expenditures that the auditors listed as “questionable” were for Service Awards which provide a mere $10 per year for service after 20 and are only available at 20, 25, 30, and 35 years of service.  It appears that these four expenditures are for a purpose actually recommended by the auditors.

 LPL Board Chair Response: Page 22-23.  The Board agrees to clarify their policy.  In spring, 2009 the Board reviewed its policy on Service Awards and decided to keep the amounts listed above. 

 Finding  #8. LPL Purchasing Guidelines needs Clarification.  Page 23.

 Condition: Page 23. The LPL records would show that LPL follows and has approved certain sections of the Model Procurement Code of Ky.  It did not approve adoption of the entire code. It is not true that LPL does not follow Model Procurement for any purchases as stated by the auditors.  The library uses the RFP and bid processes outlined in the Code. 

 Effect:  Page 23.  The audit stated that “employees may be uncertain of their responsibility and authority regarding purchasing activity.”  All staff that purchased items received several memos from the Director outlining their specific purchasing authority.  None of the six audits during the tenure of the Director indicated any problems in this area.

 Recommendation: Page 23.  The Board should review its procurement process.  The Director agrees.

 LPL Board Chair Response: Page 24.  To the best of the Director’s knowledge only the LPL adopted sections of the Model Procurement Code were followed.  If “Since 1984, the LPL Board has followed the Model Procurement Code.” as ascertained by the Chair, it was in violation.  The Board followed the policy of lowest and best bid on constructions projects.  The Code only allows for lowest.  This could be checked in the records, and certainly should be checked and clarified.

 Finding #9. LPL Rapid Rewards Appears to be an Emolument. Page 24.

 Condition:  Page 24.  The auditor sees the Rapid Rewards as an emolument.

 Effect: Page 24.  The auditor says that Rapid Rewards are not allowable.  This program was vetted by the employment lawyer of the Board.  The 2006, 2007, 2008 auditors did not identify these rewards as not allowable.

 Recommendation:  Page 24.  The audit says the program should be re-examined to see if it is legal.  Since it has already been vetted by an employment lawyer and two different auditing firms, it is difficult the see why they would have seen it as an emolument.

 LPL Board Chair Response:  Page 24-25.The Board does not view it as an emolument, but decided to eliminate it as being ineffective.  It is not stated how the effectiveness of the program was evaluated.

On Wednesday December 9th the Lexington Public Library Board allowed me to address them for three minutes. Following is my speech. At the end of my speech I gave them a report on errors and comments on the city audit of December 3, 2009.  That report will be in my next post.

Thank you for allowing me to speak to you tonight. Being in this room brings back six years of good memories as we worked together to plan the new Northside and Village branch libraries and many other programs to expand library services. It is with this spirit of cooperation and working together that I speak to you tonight.

The International Standards for the Professional Practice of Internal Audits used by the city, states that errors must be corrected and the corrections be made public.  I have prepared copies of my error report for you so it can become part of the Library’s official record.  As you know, the city refused any input from me during the last five months of the audit.  The purpose of my document is to answer questions raised in the audit, correct numerous and substantive errors and to restore my reputation based on facts. I will highlight four important areas for you.

You know if you had told me of any concern you had over conflict of interest, I would have corrected it. My contract stipulates I would have 30 days to correct a problem. There is no possible conflict of interest with SOLINET as my service on their board took place prior to my coming to LPL. If attendance at a meeting of a cooperative constitutes conflict of interest, all staff and several of you who attended such meetings would be in conflict.  I attended OCLC Board meetings and gave speeches on Saturdays, Sundays, and on vacation time, again no conflict.

In February 2009, I noticed adult type material had been viewed on my laptop.  I talked to several people who might have had access to my laptop, including workmen.  After February, the activity stopped.  I did not use the computer in that way.

David Porter told me and my lawyer there was evidence from the forensic report that my computer had been tampered with and had been compromised by five different library computers.  My office was broken into three times. There is NO basis to conclude that the questionable materials reconstructed from inactive files were the result of any activities on my part.

You know I did not delete anything from my computer.  Your commissioned forensic report proved that fact.  It is unfortunate the city did not receive the report until the day before they finalized the audit.  Perhaps they did not have time to fully analyze it.  The report, and I quote, says “there is no evidence…” that I deleted anything.

It is unfortunate the report does not mention the many positive and clarifying fiscal accounting improvements that you and I have made in six years and particularly after the 2007 audit and the quick exit of the Chief Financial Officer in 2008.  No mention is made of the separation of the Foundation and the library Board in January, 2009 which clarified expenditures and accounting between the two separate agencies.  Almost all of the alcohol that was purchased was for Foundation fundraisers.  You know most of the pizza was for Prime Time.  Your successful family literacy program that was funded by the Knight Foundation, not with taxpayer dollars.  The audit report appears to have overlooked this information.

Sorry, I have been delayed in posting my comments on the city audit.  I had a dental emergency.  Will try to post tonight.