The Lexington-Fayette Urban County Human Rights Commission had $72,000 in unpaid bills and poor accounting procedures, according to a city audit released Friday.
Mayor Jim Newberry had recommended the audit in January after the agency failed to pay its health insurance premiums to participate in the city's insurance plan.
The organization, which fired its director, William Wharton, late last year, recently asked the city for more money to pay its bills.
The audit said that "controls and procedures" were lacking at the commission, which has had difficulty managing its cash flow and paying its bills "for some time."
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The commission investigates complaints of discrimination, monitors hate and bias incidents, and provides educational outreach. It receives money from the Urban County Government — $180,500 in fiscal year 2010.
As of May 13, according to the audit, the commission owed $71,878, including $25,000 for bills dating from May through December 2009.
The commission's responses included in the audit said that the bills would be paid and that the commission has adopted new and better budget policies.
When Wharton, the commission's director of 20 years, was fired, officially the firing was without cause, Raymond Sexton, acting director of the commission, said Friday.
But the commission's board members had been concerned because Wharton was not giving them information about the agency's financial difficulties, Sexton said.
The budget reports that the commission staff made to its board "were overly optimistic" and did not include the commission's significant debt, the audit said.
Wharton, who is not being blamed for the money problems, has said that he provided financial information and that he had the best interests of the commission at heart.
In an interview Friday night, Wharton said he had not seen the audit and was not interviewed by auditors.
The Human Rights Commission did not meet its obligation toward employees' retirement plans and health insurance, even though it had deducted those amounts from employees' pay, the audit said.
That money was used instead to pay general operating expenses, commission officials have said previously.
In its response to the audit, commission officials said contributions to employee benefits would be made by Sept. 30.
In some cases, according to the audit, checks weren't deposited for periods from 10 days to several months after the checks were issued.
Additionally, at times the commission's bank account wasn't reconciled for months, resulting in insufficient funds, the audit said.
And, according to the audit, travel expenses were reimbursed without supporting documentation, a violation of the commission's written travel policy.
Commission officials said in the audit that they would correct all of those problems.
The commission's budget for the 2009 fiscal year was $440,000.
Sexton said the amount that the commission receives from the Urban County Government will drop to $166,960 in fiscal year 2011, although the commission had asked for $236,000.
The budget cut, said Sexton, "is going to restrict us significantly."
The group also receives money from the federal government, specifically the U.S. Department of Housing and Urban Development and the Equal Employment Opportunity Commission.
Commission officials have said that some of the financial problems were caused by delays in receiving the federal money.