OREM — Two recent audits show Orem city is financially strong and recovering well from last year's embezzlement of city funds.

Peterson, Allred and Jackson, a Logan auditing firm, was hired to conduct an internal audit of cash handling and related procedures — to ensure there were no other imprudent financial actions — and found the city has responded well to the embezzlement.

"Orem city has been on the leading edge taking steps to try and protect themselves through having an auditor come in and serve a role as an internal situation, to try and address concern areas such as cash flow," said Alan Allred, representing Peterson, Allred and Jackson.

Michael Johnson, a former Orem employee at the city-owned fitness center, admitted in November 2004 that he had taken some $215,000 from city coffers. He pleaded guilty to a second-degree felony charge of embezzlement this past June.

Johnson has since paid back the money, but the city wanted to make sure its financial protocol was stable.

While the city conducts an annual audit, the just completed independent audit was much more specific, said Brandon Nelson, Orem's accounting division manager.

"Our annual operations audit looks at all operations, but . . . on a much more global basis, not just cash," he said.

Immediately after the theft from the fitness center was discovered, the city changed policies and software in the recreation department to ensure better monitoring. Now, all computers are linked directly to the network at City Hall, Nelson said.

The city has also been working to improve cash handling and record keeping.

"I was pleased with the results, we were hopeful that this is what they would find, that things are in order," said Mayor Jerry Washburn. "It's really useful if we have a back-up audit as we're reviewing procedures and policies, to make sure that everything is as it should be."

The Logan auditing firm interviewed staff members who handle cash, questioned them about internal controls and tried to identify potential safety issues.

"We were just testing to see if the internal controls were in place, if they were working or if there were some weaknesses in regards to that," Allred said.

The firm conducted quarterly reviews. Part of the time was spent looking at federal funding and grant issues. They presented their most recent findings at a City Council meeting last week.

Public companies have been more heavily scrutinized since accounting fiascoes with Enron and Arthur Anderson, but government entities haven't been required to have such intense audits, Allen said.

Orem officials said their intent has been to ensure the city's finances are safe.

"I think they're on the leading edge of government," Allen said.

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