Auditor: McDonald didn't violate laws using city credit card

NORFOLK

Commissioner of Revenue Sharon McDonald did not violate any laws or commit wrongdoing when she used a city credit card to pay for extended lobbying trips to Richmond, an audit of her spending has concluded.

But McDonald did keep poor records and didn't follow Norfolk's rules regarding the use of credit cards, city auditor John Sanderlin found. He has suggested that the city and McDonald's office tighten a half-dozen policies before reissuing McDonald a card.

In a written response to the audit, which City Council members received Monday night, McDonald said she has already started changing procedures to make sure her record-keeping would be "above reproach."

She did not return calls. Sanderlin is slated to present the audit report at a City Council meeting today.

In the report, he wrote that McDonald was within her right to spend thousands on lobbying and travel, but "it appears there was a lack of knowledge of the details of city policies and inadequate controls to ensure compliance."

He suggested that McDonald keep better books, refrain from using the card for personal expenses and use a business manager to closely scrutinize expenses.

He said the city should monitor charges more closely and better coordinate with McDonald to make sure her lobbying efforts aren't redundant and unnecessary. He added that the City Council could also consider restricting money by attaching conditions to her spending.

Contacted late Monday night, council members said the city needed to make sure officials spent taxpayer money wisely.

"The report does indicate that there are some changes that need to be made," Councilman Tommy Smigiel said. "We need to do a better job as a city looking at the ways departments are operating. It's good when you can uncover things that need to be cleaned up."

Although McDonald is a state employee, her salary and the salaries of all of her employees are subsidized by Norfolk. All of her travel budget also comes from the city.

The audit, which went back to July 2005, analyzed 754 credit card transactions totaling $80,114 in purchases.

Most of the charges stemmed from McDonald's trips to Richmond during the last three winters to lobby the General Assembly on behalf of the Commissioner of Revenue Association of Virginia. McDonald, who is the city's chief tax assessor, said her lobbying efforts helped bring roughly $1.5 million in additional state funding to her office.

The Virginian-Pilot reported earlier this summer that McDonald spent tens of thousands of city money while on those trips, which at least one time conflicted with the city's lobbying efforts.

The association reimbursed Norfolk for McDonald's expenses during the 2009 and 2010 General Assembly sessions, but the city was not reimbursed for nearly $11,000 she spent in 2008.

Included in the audited charges were hotel bills, restaurant tabs and gasoline purchases.

The majority of her spending, Sanderlin's report said, "appeared to be legitimate business expenses." He noted that McDonald as a constitutional officer had her "own judgment and discretion as to how to spend budgeted travel funds."

However, for more than $25,000 of purchases, there were no receipts, and an additional $5,400 of expense receipts didn't provide enough detail, Sanderlin wrote. Auditors used McDonald's scheduling calendar to determine what some of the purchases were.

In many cases, the report said, auditors could not determine how many people attended dinner or if purchases were of a business or personal nature.

Over the past five years, McDonald has reimbursed Norfolk $3,124 for personal purchases she put on the city card.

Among Sanderlin's findings were a bill for a two-month hotel stay that violated the city's $1,000 maximum charge policy and $548 of local fuel charges that should have been charged to the city's fleet gas card.

There also was a $450 tip McDonald left for a 60-day hotel stay.

"I don't see how she can justify that," Vice Mayor Anthony L. Burfoot said. "What she's saying is, based on the rules we have in place, she has the right to do that. Even if that's true, given the financial difficulties we're experiencing, she exercised very poor judgment."

Mayor Paul Fraim and several other council members either didn't return calls Monday night or said they had not yet read Sanderlin's report.

Sanderlin is expected to begin auditing some of the city's other 440 credit cards in September, selecting accounts at random to check.

The credit card audit was already scheduled and is not a result of McDonald's credit card spending, he has said.

"Credit cards have been considered a high-risk area," he told the council last week.

City Manager Regina V.K. Williams said that while the city's finance department looked randomly at some credit card bills, the monitoring of spending is primarily left to department heads.

In the case of McDonald, that left her in charge of approving her own credit card expenses. McDonald had previously criticized the city's oversight policy, saying: "Basically, there is none."

Meghan Hoyer, (757) 446-2293, meghan.hoyer@pilotonline.com

Harry Minium, (757) 446-2371, harry.minium@pilotonline.com