Audit of city rec centers finds sloppy finances, risk of fraud

NOTE: This story was updated Thursday morning.

Three Philadelphia recreation centers violated a long list of bookkeeping regulations, says the city controller, who has referred one former treasurer's activities to the District Attorney's Office.

City Controller Alan Butkovitz released an analysis Wednesday of three of the 126 Philadelphia Recreation Advisory Councils (PRACs). The councils, which are responsible for managing the individual recreation centers' accounts, oversee nearly $2 million.

Butkovitz said the investigation - requested by the Inspector General's Office - met "great resistance" from the councils, which delayed the independent audit for more than a year because of arguments over jurisdiction, since the centers raise funds in their communities.

Ultimately, the Controller's Office agreed to look at a sample of three recreation Centers - Fox Chase, Vare, and Vogt - instead of the 14 they had originally requested.

All three had problems.

At Fox Chase, in Northeast Philadelphia, a former treasurer, Kathleen Goodwin, kept neither a general ledger for the account nor bank statements, and signed checks payable to herself. When she left - prior to the audit - she took all financial records with her, the analysis found.

Butkovitz said he referred her actions to the district attorney.

Goodwin, in a response early Thursday, rejected findings the report made about her time as treasurer.

"Financial records were kept daily on the everyday activities at the Fox Chase Recreation Center while I was there," she said in an email. "I did detailed monthly financial reports for the entire recreation center's activities, which included summer camp, after school program, hockey, drama, dance, to name a few."

Goodwin said she was never contacted about the analysis by the Controller's office.

Despite rules against compensating members or employees from council funds, four officers received a total of $18,976 from July 2011 through December 2011, and four parks and recreation employees were paid a total of $12,174 during that same period.

At Vare Recreation Center, in South Philadelphia, a disorganized book of expense and deposit information, displayed at the news conference, was barely legible and deposits did not agree with totals.

Canceled checks, including 49 at Vare and 52 at Fox Chase, bore only one signature, instead of the two required to reduce the risk of fraud.

At Vogt, in the Northeast, blank checks were being signed by advisory council officers.

Deputy Mayor Michael DiBerardinis, who oversees Parks and Recreation, issued a list of recommendations in response to the findings. They include assigning third-party supervisors to collect monthly reports, site visits, and a tracking schedule to record whether the advisory councils are submitting reports on time.

Butkovitz said the response by DiBerardinis is a necessary first step but needs more muscle.

"I don't think I would say we would concur this would be the final word on it. I think there's got to be some strong action . . .," he said. "The steps he's outlined are kind of general. I want to see how they become concretized."

Given the "high-risk findings," Butkovitz said, his office would audit other centers in due time.

"If you look at three out of 126 and one results in a referral to the district attorney, it's something that merits short-term reviews," he said. "We find a problem once, at a high level of probability, there's a good chance you're going to find more of those kinds of problems."