RAPID CITY - Pennington County's 2006 financial statement contained four errors that drew written criticism from the South Dakota Department of Legislative Audit.

The county's financial statement originally received oral comments from the auditing agency - a lesser sort of reprimand or concern raised that is less severe than a written comment. A written comment is forever bound to a county's audit.

County Auditor Julie Pearson said the DLA's switched from oral comments to written comments after it changed auditing standards in late May, well after the county had submitted its report. The county was then informed this month of the change.

Bruce Hintz, DLA auditor in charge, said new audit standards came out in 2006, but no training was provided until May 2007. The new standard essentially took away his flexibility on providing oral comments, and now, everything must be in writing, he said.

"Our hands are kind of tied by this," he said. "This audit is no different than we've completed in prior years. The only thing now is we've got to communicate some of our findings in writing rather than orally."

Pearson called the errors essentially clerical in nature and said the bottom line is no money was missing.

"There's not a cent missing on anything in our financial reports," she said. "I don't want anyone to think that our books aren't balanced or that we're making grave mistakes. It's not like we recorded a liability as an asset and our books are all unbalanced. They are not."

She said oral comments are not taken any less seriously, but the written comments added a new level of criticism to the county's financial statement.

"This is a serious ding for me," Pearson said. "We don't take financial reports lightheartedly. We prepared them just as we thought they should be prepared, and then, eight months later, we find out we're getting a written comment on them.

Pearson said the four errors involved not breaking funds into the line items where DLA believed they should go. However, she said, no money was unaccounted for and no funds were in the wrong sections.

The errors included:

* $11,535,853 million in investments incorrectly reported as part of cash and cash equivalents. DLA said the investments should have been put on its own line item. The total assets line did not change.

* $1.8 million of prisoner board for juveniles on a line other than prisoner care.

* $3.49 million in secondary reserve was incorrectly reported as unreserved fund balance instead of fund balance reserve.

* $335,000 in motor-vehicle money should have been designated using a different revenue code of the nine motor-vehicle revenue codes.

Pearson said her office intends to take longer next year preparing and double-checking its financial report before submitting it to legislative audit, and as a result, she doesn't expect to meet the March 1 deadline required by state law.

Pearson believes county auditors should receive training, like the state auditing agency, before new standards are implemented so local governments know what rules they are operating under.

"It's hard for us to get the training if we're never invited," she said. "They're set up to do that type of training so they can come in and audit us and then write us up. That's basically how I see it. We try very hard when we are told of an error one year that we don't make it the next."

With no training and no communication from DLA, counties don't find out about mistakes until they get written up for them, she said.

"Then we learn, after the fact, not to do that specific thing again," she said.

Pearson said the county will republish its balance sheet showing investments split out from cash and cash equivalents.

Contact Scott Aust at 394-8415 or scott.aust@rapidcityjournal.com