Audit: USS Kidd has history of financial mismanagement

The agency that oversees Baton Rouge’s beloved USS Kidd, the centerpiece of the Louisiana Naval War Memorial, has been flagged by an audit for a history of financial mismanagement that includes a debt of more than $300,000 for unpaid insurance premiums.

The audit reviewed budgets and spending practices from 2013, when the agency was under the direction of longtime Executive Director Maury Drummond.

In December, Alex Juan took over the agency, and she says agency staff is working diligently to implement new responsible spending practices and get its budget back into the black.

“I’m sure people see the findings and say, ‘What is going on over there?’ ” Juan said. “But we’ve already identified these issues and are correcting them all, and next year’s audit is going to be better. We’re taking three and four steps to make sure this never happens again.”

The audit, conducted by Covington-based accounting firm LaPorte and released Monday by the state Legislative Auditor’s office, also notes that the last three years of spending under the agency is being investigated by the Inspector General’s Office, in particular the “questionable spending” by Drummond.

Drummond could not be reached Monday for comment.

State Inspector General Stephen Street said he couldn’t comment on the investigation but confirmed that his office is doing a “pretty comprehensive” evaluation of the commission.

Street said it was unclear when the report would be released, but he said the staff has been working in “full cooperation” with his office.

The review found that the Louisiana Naval War Memorial Commission owes the Louisiana Office of Risk Management $334,440 in unpaid insurance premiums. While the report said there was not a repayment plan in place, Juan said the agency has since worked out an agreement to pay $5,000 per month.

Juan said their insurance costs skyrocketed after Hurricane Katrina, growing from $38,000 per year to $93,000 annually.

The audit also took issue with a lack of management oversight and proper documentation for expenditures. Out of 145 items tested in the audit, 74 lacked “proper support to provide assurance that the expenditure was a legitimate business expense.” One of the items was a personal expenditure not reimbursed by the employee, and another item was a gift card with no specified business purpose.

When Juan took over the agency, she said she implemented new policies to require documentation and reviews for spending.

The agency also has failed to inventory its assets, which is required of governmental agencies by state law.

Juan said the museum is now closed to the public every Monday, which gives staff time to focus on cataloguing and assessing the value of their massive inventory.

“It’s a monster of a project,” she said. “We have 30 years worth of artifacts.”

Juan said she hopes the agency will be caught up by the end of the year.

Moving forward, Juan said she’s trying to focus on educational outreach and community partnerships to generate more revenue for the nonprofit.

The state agency is almost entirely funded by self-generated revenues, stemming from ticket sales for tours, building rentals, gift shop sales and reunion bookings.

Since Juan took the helm, she’s seemingly been putting out fires left for her by the previous administration. The budget shortfalls meant the cancellation of one of Baton Rouge’s most beloved Independence Day traditions this year — the mock aerial attack of the USS Kidd . People also were no longer allowed onto the ship to watch the fireworks show on the river.

Juan made the tough call because she said there were both financial and safety concerns. She said the event hasn’t generated enough revenues in past years to justify hosting it.

* This story was edited after posting to remove a reference to the commission not being able to afford insurance to cover the July 4th events. That information was incorrect.

Follow Rebekah Allen on Twitter, @rebekahallen. For more coverage of city-parish government, follow City Hall Buzz blog at http://blogs.theadvocate.com/cityhallbuzz/