A city department charged with floating kayakers down the Tennessee River and leading bicycle tours across Chattanooga faces scrutiny for how it handles its records.
A city audit of Outdoor Chattanooga for 2009-10 suggests there is a high probability that an employee or employees have stolen money from the program. The audit slams the agency for laxity in accounting principles and recordkeeping.
"We're guilty of two things," said Phillip Grymes, executive director of Outdoor Chattanooga. "We're lousy accountants and we've dropped the ball on some things."
The audit said some Outdoor Chattanooga cash collections never were deposited with the city treasurer and that some checks to the department were diverted to the Friends of Outdoor Chattanooga.
City Audit Director Stan Sewell recommended further investigation to find out how much money may have disappeared and how it happened. Sewell said last week he has opened a file and plans to conduct a more thorough audit.
Larry Zehnder, director of Parks and Recreation Department, said there were indications the funds were missing due to an accounting error and not theft.
"We welcome an investigation," Zehnder said.
An audit of Outdoor Chattanooga found a list of problems including:
* Funds seem to be missing and there is high chance of theft by an employee or employees.
* Executive Director Phillip Grymes served on the board of directors for an organization directly related to Outdoor Chattanooga, which violates city policy.
* Numerous violations of accounting principles and recordkeeping.
* Fees waived and venue rentals discounted contrary to City Code.
Source: Chattanooga Internal Audit
Outdoor Chattanooga was created in 2003 by then-Mayor Bob Corker to promote and market the outdoor possibilities of Chattanooga and the region. The department helped put on the River Rocks festival last year, created the OutVenture program that leads kayak trips on the Tennessee River and recently started a bike-share program downtown.
The audit, published in December, lists a slew of violations, including Grymes' working as director of Friends of Outdoor Chattanooga, a nonprofit charged with raising money for the department.
Other violations included improper recordkeeping, waiving fees without City Council approval and discounting or waiving fees for some groups or individuals on trips and at city venues.
The report's author, auditor Pamela Swinney, saved her harshest language for missing funds.
"We recommend a comprehensive investigation into the missing collections," Swinney wrote. "Upon request, Internal Audit will open a special project to facilitate this investigation."
Richard Beeland, spokesman for Mayor Ron Littlefield, said the city has not asked for any further investigation and said Parks and Recreation and Outdoor Chattanooga are taking steps to resolve the problems.
Grymes and Zehnder said Friday they are reworking procedures Outdoor Chattanooga uses for collecting money. Grymes said employees are being trained in accounting and accounting principles.
Grymes said he has resigned from the board of directors of the Friends of Outdoor Chattanooga and is formalizing a contract between the city and the nonprofit.
Zehnder said Outdoor Chattanooga also plans to ask the City Council to change the ordinance and allow fee waivers and discounts at city venues for certain groups that also help Outdoor Chattanooga.
"We absolutely agree with a lot of the recommendations," Zehnder said. "We'll handle them the best we can."
Contact Cliff Hightower at email@example.com or 423-757-6480. Follow him on Twitter at twitter.com/CliffHightower.