In a memorandum harshly critical of a police investigation of the Salt Lake City Business and License Office, City Treasurer Buzz Hunt defended the office's track record but recommended some changes in its management policy.

The memo, obtained by the Deseret News on Monday, is one of two policy audits to be conducted by the city following a six-month police probe clearing supervisor John Katter of criminal wrongdoing in the handling of a $150 licensing payment.Hunt criticized police investigator Ken Thirsk for taking six months to complete the probe and called him inexperienced in licensing office management. Hunt labeled the investigation "little more than armchair observations."

"Inflammatory rumors" that $1 million had been misappropriated at the office were leaked to the press as "political pranks" designed to enhance police bargaining positions during contract negotiations, Hunt wrote in the July 15 memo to Finance Director Lance Bateman.

However, Hunt acknowledged "minor shortcomings" in record keeping and a need to review enforcement policy at the office, which processes 12,000 new and renewed licenses yearly.

"I think there are some legitimate management problems, and we've got a lot of work to do to improve," Hunt said Tuesday morning.

The police probe focused in part on the office's inability to trace bounced checks from delinquent businesses. Thirsk said $6,272 in outstanding checks could not be traced in the office because of poor record-keeping techniques.

Hunt noted that the outstanding checks amounted to only one-half of 1 percent of all payments made and said the treasurer's office already was working to improve an accounting system at the time of Thirsk's investigation.

Although roughly $2,000 remains unaccounted for, a new collection system implemented Feb. 1 has centralized bookkeeping and boosted collection rates on bounced checks to 100 percent, he said.

Thirsk was also critical of the city's methods of levying fines against businesses that fail to pay licensing fees on time. Frequently, businesses that were chronically delinquent were never issued fines.

But because the office is staffed with only two enforcement officers, enforcement is "outmoded and ineffective," Hunt wrote. Also, the city must review its enforcement policy and question the "harder approach" to levying fines, which can be upward of 50 percent of fees for delinquent businesses.

"Is it (issuing fines) a tool for code enforcement? Or, is it simply a means of generating general fund revenue?" Hunt wrote.

Last year the business and licensing office collected $2,516,291 in license fees, according to treasurer's records.

Hunt said the police probe will speed the review process along but he was angered by the report because it was critical of areas his office had already identified as troublesome.

"You get a little defensive when you're making an effort to improve something and someone starts taking shots at you," he said.

Thirsk said he has 11 years of management audit experience to rely on in investigating the business licensing office. He said he knew nothing of charges that the report was issued to enhance police bargaining positions and defended the length of the probe, saying Hunt "is not an investigator and I am."