Waldport Mayor Walks Out Of Council Meeting Calling Audit Discussions Unethical

The Waldport City Council’s discussion of a long-delayed financial audit turned contentious when the mayor walked out of the meeting, saying she believed it was “unethical” to proceed without more time and direct input from the auditor. The council was reviewing a draft of the city’s FY2021 audit. City Manager Dann Cutter told the council the audit, involved finances handled at the time by the Cascade West Council of Governments (COG). The 80-page draft was included in the council packet less than 72 hours before the meeting.

Mayor Lambert questioned both the timing and the way the document was presented, saying councilors had not heard directly from the auditor and had not received the separate letter describing “significant findings.” “So, I don't feel like I had enough time to go over this 80 page packet that's five years delinquent,” she said. “Nor do I feel like we've had a chance to speak to directly the auditors.” She also argued the packet did not appear complete and that it had come from city staff rather than the auditor. “My suspicions went up that I didn't feel that I was receiving the entire packet,” she said. “And the package didn't come from the auditor. When I had a municipal audit, the auditor sent the packet directly to the council.”

City Manager Dan Cutter pushed back, saying the council was actually seeing more than it usually would at this stage. He explained that draft audits are typically handled internally by the city manager and finance staff, with questions and corrections sent back to the auditor before a final report and opinion letter go to the council and the Secretary of State. “This is as has been explained. This is a draft copy of the audit that we released,” he said. “Normally, this would be done entirely internally by management. We would review the audit, and we would send back any concerns or questions we had to the auditor. They would finalize the audit, and then they would present the audit to the Secretary of State's office and ourselves and the council would then vote to approve the audit.”

Cutter said he chose to put the draft in the council packet “in the best interest of transparency” so councilors could see and react to the same document staff was reviewing.

“If you'd rather not, Madam Mayor, have that transparency, we can certainly do it behind the scenes, which seems to be your preferred method,” he said at one point. “You can see the audit when the audit is finalized.”

Lambert said she believed bringing a draft with “significant findings” to council without the auditor present or the accompanying opinion letter was improper, especially with a recall effort underway in the community. “I'm under the belief that this draft of an audit is performative, because we're not getting this from the auditor directly. It came from you,” she told Cutter. “With there being so much suspicion and a recall happening, it feels like this was a perfect opportunity to have a third party professional come and speak to the public about this very controversial audit.”

Cutter countered that the draft showed no missing money or misappropriation, but did flag problems with internal controls that were the responsibility of the COG at the time.

“What I'm showing is that there's no evidence whatsoever of malapropriation or missing funds,” he said. “What they're going to claim is that there was not the right control, and I absolutely agree, which is why we asked for a refund. They were not doing bank reconciliation in a timely manner.”

He said the city has since changed firms and brought in additional third-party help to strengthen bank reconciliation and capital asset tracking. He also stressed that, from the auditor’s perspective, it was a relatively uneventful year. “We wanted to make sure that you were able to see very specifically before the audit final that there was no finding of wrongdoing,” Cutter said. “The audit showed that we had a relatively, frankly, boring COVID year without a lot of grandstanding one way or the other, but that absolutely we could do stuff better.”

The discussion culminated with the mayor declaring that she had consulted the Oregon Ethics Commission and felt obligated to leave if she believed the meeting was unethical.

“I am stating that I find this unethical,” she said. “My reasons are I had less than 72 hours to review this… I didn't hear it directly from the auditor, and I don't believe it's a complete packet, and I don't have a letter from the auditor telling us this is even a complete packet. So I am told that if I find the meeting is an unethical finding or believe it to be that I'm to object and I'm supposed to leave this meeting.”

She then left the meeting, saying, “I'm not storming out, I'm not angry, I'm not even mad about any of this. I just think this could have been presented in a better way.” After the mayor attempted to adjourn, a councilor moved to override her decision and continue the meeting. A second was made, and the remaining councilors proceeded to discuss the draft audit and what questions to send back to the auditor, including concerns about changes to internal cost recovery funds, confusing page references, and clearer explanations of “significant” internal control deficiencies.

In the end, councilors did not vote to approve the draft audit. Instead, they agreed that staff should compile their questions and request more detailed, plain-language explanations from the auditor before the final report and opinion letter are issued and sent to the Secretary of State.