After the release of a state audit last month, the city of Mona is beginning to see some big holes in the way the city has been doing business.

The state audit of the city's internal controls revealed poor policies and significant weaknesses concerning transactions and conflicts of interest.

"Of 30 disbursements reviewed at Mona City, 14 were to companies owned by the mayor, City Council members and/or the treasurer or parties related to them, causing a conflict of interest between these officials' public duties and personal interest," according to the audit.

Six of those transactions were to businesses directly owned by those in office without any disclosure, which violated the Municipal Officers' and Employees' Ethics Act, stated the audit. The audit also found that the city failed to document justification or obtain appropriate bids for the transactions.

Everd Squire, director of finance for Mona City, said the city did not do anything illegal in it's business transactions. Because of the small size of the town, Squire said the council was somewhat limited in the number of companies from which it had to choose.

The city has had a lot of growth recently, he said, which has contributed to many of the problems found in the report.

"We're basically transitioning from a town to a city, and there are definitely some weaknesses," Squire said.

Squire said the city did not obtain bids for projects because it did not have to. The report found, and Squire agreed, that the city's purchasing policy was inadequate and its required level for obtaining bids was too high.

Mona does not require any bids for purchases less than $20,000, and it only requires two or three phone bids for purchases less than $50,000. The state policy is two or three phone bids between $1,001 and $5,000 and advertised written bids for purchases between $5,001 and $50,000.

Squire said the city followed the policy with the disbursements in question, but the policy must be fixed. He said he has been working to draft a new policy for the City Council to vote on in January.

"We're making strides right now to make sure we're fixing what they've pointed out," he said.

One of the problems Mona City has had in making the transition, Squire said, is the different requirements the city now has to follow. The audit found that too much surplus money was held in the city, which Squire said was due to the rules Mona followed as a town.

Towns can hold up to 75 percent of the budget as surplus, while a city can only hold 11-18 percent.

"We just got caught in a situation where we're doing things somewhat different from the way they had been done, but still not the way they should be," he said.

Squire said the state audit is the same as the yearly audits the city does on its own. Audits are meant to find problems, he said, so the city can correct them. Most of the problems have been fixed, and others are still being worked on.

One problem that has already been corrected is that of handling finances. The audit found that there was little separation of duties when it came to holding money, signing checks and maintaining the books.

Squire said he performed all these duties, just as the city has done for years. Since the audit, the city treasurer handles treasurer duties in holding money and signing checks, while Squire performs the duties of recorder by maintaining books, preparing checks and auditing claims.

Although the city has problems it is working to fix, Squire said they have been brought into a brighter spotlight than was warranted.

"Unfortunately, I think the whole thing stemmed from people who were unhappy with the way things were done," he said.

Cody Adams, who will be sworn in as a Mona City Council member in January, said he agrees with Squire. Adams said he believes one of the biggest reasons he was elected was because residents are dissatisfied with the way the government has been run.

Although he believes the findings of the audit should be brought to light, Adams said he believes growth has been a factor in the situation.

"We are definitely struggling as a city," he said. "We are struggling with a lot of growth and some inconsistencies with the way that growth has been managed."

Adams said he knows Squire personally, and does not believe the finances of the city were deliberately mismanaged.

"I find it hard to believe that he would intentionally defraud someone," he said.

Cory Squire, a member of the City Council and Everd Squire's son, said none of the mistakes were intentional on the part of the city. The City Council ends up doing work because it could not get any bids, and members feel they need to provide the work for the city at a reasonable price.

"That's the way it's been for the council for a number of years," he said. "The council ends up doing the work ... everybody on the council tries to do what's best for the city."