The BKD auditing firm has concluded that the city of McAlester overpaid former police chief and former Ward 4 city councilor Dale Nave by $21,900 when buying back unused leave.

BKD Auditors Jeff Roberts and Angela Morelock referred to Nave’s alleged overpayment while meeting with the city Audit and Finance committee on Thursday. The auditors met with the committee to present the results of its investigative audit of the city’s leave buyback program and bond issues.

BKD auditors also concluded that $3.2 million in city bond funds had either been used for purposes other than intended or used for unknown purposes during the 1999 through 2005 fiscal years.

Auditors concluded that the money went into the city’s general fund, but they could not track how it was spent. The auditors said they did not find any evidence that the money had been embezzled or stolen.

However, questions remained about exactly how the money had been spent — and what to do, if anything, about it.

“The city may need to book a payable to the general fund,” Morelock said.

After hearing the investigative audit findings, the city Audit and Finance Committee decided that the BKD auditing firm did not need to expand the scope of its audit at this point — especially since investigations by the FBI and the Oklahoma State Bureau of Investigation have been under way.

However, committee members left the door open for auditors to examine other areas if something new turns up later.

Meanwhile, the McAlester City Council has a special meeting set for 5:30 p.m. on Tuesday in the council conference room on the second floor of City Hall.

City councilors plan to “consider action for an executive session to discuss legal action related to findings in the investigative audit report.”

Also on the agenda is “possible action to approve legal action” once the council reconvenes in open session.

In a summary report issued late Friday, the Audit and Finance Committee concluded that “All members of the committee were in agreement that BKD had complied with all the requirements of the audit contract and accomplished the audit in a very professional manner.”

BKD also presented recommendations. The city plans to consider:

• Recouping money paid as a result of what auditors called excessive leave buy-back claims.

• Replenishing — or paying back — bond funds that were used for unauthorized purposes.

• Filing claims against more bond and insurance policies the city carried for employees or officials

• Civil or criminal court cases.

Referring to the alleged excess payments to Nave, auditors noted that in a memo dated Jan. 5, 2004, former City Treasurer Carolyn Hearod requested that Nave be paid $58,320 and that it represented 100 days of vacation leave and 125 days of sick leave.

Since city policy only allows a combined total of 135 days of vacation and sick leave to be carried over into the next calendar year, the sale of 225 days would have exceeded the allowable amount, the BKD auditors concluded.

Auditors said they didn’t find any evidence that Nave himself requested the amount by which they contend he was overpaid.

A family member at Nave’s residence said he was unavailable for comment.

The McAlester News-Capital has previously reported the BKD audit also concluded that former City Manager Randy Green had been overpaid from $345,000 to $496,000 beginning in fiscal year 1999.

Green has disputed the numbers and said the auditors never contacted him for any information.

BKD auditors also concluded that former McAlester Fire Chief Joe Benson had been overpaid a minimum of $10,665 for sales of unused leave time back to the city.

Benson declined to comment when recently asked about the matter, but said he may have something to say at a later time.

BKD auditors did not find evidence any of the city’s other division heads sold excess leave to the city, but said records were difficult to track because they were allowed to take unrecorded administrative leave after giving verbal notice.

McAlester City Manager Susan Monroe said the practice of administrative leave has been eliminated.

Audit and Finance Committee Chairman Mel Stubbings said the committee’s summary report will be formally presented to city councilors.

“BKD, in the opinion of the Audit and Finance Committee, did an excellent job,” Stubbings said.

In the Audit and Finance Committee report concerning the investigative audit findings, members said the audit served a significant purpose.

“We believe that this audit report definitively explains the extent to which improper action occurred during the audit period relative to the leave buybacks and the use of bond proceeds,” the signed report states.

“We also note that the auditors did not identify any other areas of concern that they believe significant enough to warrant further investigation by the city at this time.”

Audit and Finance Committee members who signed the report are Stubbings, acting City Treasurer Steve Harrison, Jane Auld, Assistant McAlester School Superintendent Jim Northcutt, H. Gene Walker, City Manager Susan Monroe and City Attorney Bob Ivester.

“The city has been spending in excess of $3 million a year that it no longer has,” Stubbings said, referring to the previous administration.

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