Cumberland Times-News

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November 25, 2013

Canal Place audit finds few problems

CUMBERLAND — Maryland’s Office of Legislative Audits published results last week from a review of the record-keeping practices and procedures for Canal Place, with the tourism center being cited for only three areas of concern.

With many state-funded entities receiving more than 20 concerns, known as findings, the audit of the Canal Place Preservation & Development Authority gives the tourism hub a relatively clean report.

 The OLA audits all entities in Maryland that receive state funding about every three years, including school systems, governmental agencies and state-sponsored governing bodies.

“We want to comply. The auditors with the OLA are only doing their job,” said Dee Dee Ritchie, executive director for Canal Place.

The OLA audit covers the time period of May 19, 2010, to April 8, 2013.

The three findings made by the OLA centered around the method of processing invoices for janitorial services, obtaining hotel/motel tax revenue supporting documentation, and problems with the annual fiscal audits not being completed in a timely fashion.

“Our audit disclosed that adequate support documentation was not always obtained to support payments for janitorial and maintenance services and to verify certain revenue. Additionally, the authority did not engage an independent certified public accountant in a timely manner to conduct annual audits of its financial statements,” wrote Thomas Barnickel III, legislative auditor, in his report on Canal Place.

“We have corrected every finding that we’ve had,” said Ritchie.

Ritchie, who has been at her post for 17 months, said many of the findings resulted from practices that had been in place under prior administrators.

“Our annual audits had fallen behind before I was here. We are getting caught up. Huber Michaels and Co. (local accounting firm) are starting our 2013 audits now,” said Ritchie.

Cindy Foreman, the administrative officer for the authority, explained the problem with the payment on janitorial service contracts with Tim Martin Home Improvements, which does maintenance for Canal Place.

“The previous director had decided to pay them one-twelfth of his contract at the beginning of each month,” said Foreman.

Canal Place paid Martin’s company approximately $320,000 from July 2010 to June 2013, according to the OLA report.

Foreman said they would then adjust his pay on the final annual payment depending on whether Martin had worked more or fewer hours over the year. Canal Place officials say this was done by prior adminstrations to save on extra invoicing and paperwork.

“We have corrected it. We now submit his hours biweekly as they (the OLA) had wanted,” said Foreman.

The OLA also said that the authority did not have adequate records from the Fairfield Inn in regard to the gross amount of hotel/motel room sales and the subsequent hotel/motel tax paid.

The Fairfield Inn sits on a portion of the Canal Place’s 11-acre tract. The Canal Place property is owned by the state of Maryland.

“When we found out, we requested the information from the Fairfield and got it immediately,” said Ritchie.

The OLA said the authority should have kept monthly and annual reports from the Fairfield so it could determine the accuracy of the hotel/motel tax collected by the city of Cumberland and Allegany County.

Canal Place received a percentage of the hotel/motel tax revenues in past years. The authority received a total of $120,300 in hotel/motel tax dollars in fiscal 2012. Those hotel/motel dollars accounted for around 25 percent of Canal Place’s total income for 2012, according to the OLA.

However, both the city and the county are phasing out the hotel/motel tax revenues to be paid by 2014.

The OLA report showed that Canal Place had total expenditures of $610,000 in fiscal 2013.

Ritchie said beginning in 2014, Canal Place will receive one and one-half percent of the Fairfield Inn’s gross room sales.

“It seems like it will be about $40,000 to $45,000,” said Ritchie.

Greg Larry can be contacted at glarry@times-news.com.

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