For example, the consultants said the Begich administration didn't produce monthly reports of revenue and spending for the Assembly as required by city code.
And they said the Assembly also lacked prudence because it failed, "as a body, to demand the production of the required reports before making financial decisions" that significantly affected the city's budget and its savings fund.
The audit, or review, left room for discussion as to whether the former mayor misled the Assembly.
"At first blush it appears that it will provide fodder for both Begich accusers and apologists to make their case," said Assemblyman Patrick Flynn.
"Two things that strike me are that there's enough blame to go around for the past administration and the Assembly," said Assembly Chairman Dick Traini, "and the Assembly didn't have a financial expert" of its own.
He said he wants to hire one.
Begich left the job of Anchorage mayor in January 2009 to become a U.S. senator for Alaska. During the last months of his administration, the national economy was crashing and city investments lost millions.
As his term ended, Begich pushed through four long-term labor contracts that critics contended were too generous, as well as the 2009 city budget.
Two weeks after Begich left, his successor as mayor announced a multimillion-dollar budget shortfall and began cutting city expenses.
The administration of current Mayor Dan Sullivan and some Assembly members have been critical of how Begich handled city finances during his last months in office. Last winter, the Assembly voted to hire independent consultants to investigate alleged irregularities.
'AWKWARD' TIMING
The audit was released about 1 p.m. Wednesday, timing that Begich spokesman Julie Hasquet called "very awkward." It was an hour before the memorial service for Sen. Ted Stevens, which Begich and Sullivan were both attending.
Assembly member Elvi Gray-Jackson, chair of a municipal audit committee that reviewed the report, said she and municipal internal auditor Peter Raiskums agreed to the release time, wanting to get the report out as quickly as possible.
Raiskums received the final version from the auditors Wednesday morning, Gray-Jackson said, and needed a brief time to check that corrections the committee requested earlier in the week had been made.
She said they weren't even thinking about the Stevens event when they gave the go-ahead.
CRITICS AND SUPPORTERS
Assembly member Bill Starr, a member of the municipal audit committee and a longtime critic of the Begich administration, said the audit and backup material show the executive branch did mislead the Assembly: "I firmly believe it was a display of bad government."
Gray-Jackson, a frequent supporter of Begich, said, "The audit as a whole shows the administration did nothing unlawful. They did not provide a monthly report. Past administrations didn't either."
Hasquet released a statement that said, "We appreciate the report makes it clear the hysterical allegations of misconduct or violations of law have no basis whatsoever."
She said many lessons have been learned by the look back, but she pointed out that the events described took place during "the most extreme economic conditions since the Great Depression. Those conditions at the end of 2008 created challenges for governments and business in Alaska and across the country that were unparalleled."
Sullivan had not yet read the report by late Wednesday afternoon, said his spokeswoman.
HOW MUCH SAVINGS?
Other findings in the report:
• The auditors said the administration's estimate of the fund balance was miscalculated, likely due to the state of the economy in late 2008.
The city keeps millions of dollars known as the fund balance in savings accounts for emergencies, for when revenue falls short and for reassuring lenders they'll be paid.
The auditors said then-chief fiscal officer Sharon Weddleton estimated in November 2008 that the city would have a $34.5 million fund balance at year-end. The actual fund balance turned out to be close to half of that.
Her estimate, given to the Assembly, was based on methods that didn't take into account "the rapidly declining economy," the auditors said.
The auditors criticized the administration for "failing to heed warnings" that fund balance estimates could be significantly off.
Weddleton said Wednesday, "There was a cover memo attached to make sure the Assembly understood this had never been done before," and that actual fund balances could be significantly different from what she was projecting.
"It was calculated in October using September data. But the worst month was November. So they are criticizing us for not being able to predict the future," she said.
• The auditors said the administration did not properly handle budgeting for PERS, the state Public Employees Retirement System that is the retirement plan for many city employees.
The state began picking up a larger share of the city's obligation in mid-2008, affecting the last half of the city's 2008 budget. That meant the city overbudgeted how much it would spend on the retirement plan.
But city budget officials didn't tell the Assembly about the change so the Assembly could amend the budget by cutting it. The administration should have done so, the report said.
Weddleton said city financial officials wanted to lower the budget. But city auditors, the accounting firm of Mikunda, Cottrell & Co., disagreed.
The administration ultimately balanced the accounts at the end of the year.
• The independent consultants noted in their new report that Mikunda, Cottrell & Co. had audited the city for 2008 and found city accounting to be in line with generally accepted U.S. accounting principles.
MRW Consulting Group of Plantation, Fla., did the new forensic review. The firm was hired in April to do the study at a cost of up to $50,000. Their report is 30 pages but there is also a thick pile of supplementary material.
The Assembly scheduled a work session on the report for noon Friday in City Hall.
Find Rosemary Shinohara online at adn.com/contact/rshinohara or call her at 257-4340.
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