The state auditor’s office released no findings in connection with two just-completed audits of Kenmore city operations.

However, Councilman John Hendrickson is keeping up his criticism of the city’s record keeping and budget, arguing state audits do not address key issues such as whether or not Kenmore is operating at a deficit as he contends it is, or in coming years will be, the case.

Covering 2009, the state completed both an audit of Kenmore’s financial statements and finished an accountability audit. Both audits are done yearly of every city in Washington.

At an exit conference held Sept. 7 with councilmembers and other local officials, G. Blaine Fritts, an assistant audit manager for the state, said his office would issue one management letter in connection with the latest study of Kenmore’s books. The letter criticizes the city for three change orders made in connection with the $7.9 million construction of the new Kenmore City Hall.

According to Fritts, the changes occurred after Kenmore essentially rebid the project. When the second round of bids came in well below initial estimates, officials added back into the project via change orders some aspects of the work previously cut because of cost considerations. Fritts said since the changes were outside the original scope of the work, they should have been dealt with as separate projects.

The change orders totaled roughly $576,000 and put back into the overall project an expanded second floor and a public plaza. Fritts said given the current economic climate, many cities are having similar experiences rebidding projects and making similar accounting errors.

A management letter is the second highest of three levels of audit exceptions issued by the state. The highest level exceptions are called findings, the lowest are exit items, what Fritts described as minor issues not worthy of a formal letter or finding. Fritts outlined five such issues during the exit conference.

For example, regarding payments made with city credit cards, the state found that five travel-related expenses were not approved by the city manager. The city also paid $135.54 for certain long-distance phone calls despite the fact there is no documentation stating the calls concerned city business.

After the audit conference, Hendrickson again asserted nothing in the state study refutes his assertions Kenmore is in financial trouble, an assertion flatly denied by other city officials, perhaps most notably Mayor David Baker.

“It (the audit) is a history report on our cash flow for the prior year,” Hendrickson said, contending the audit has nothing to do with the city budget or the financial reports regularly presented to councilmembers by the administration.

On another financial front, Hendrickson also has criticized Kenmore officials for allegedly not putting enough money toward road maintenance. He asked Fritts if such a shortcoming would show up in an audit. Fritts said the answer was outside the scope of the exit conference and declined to answer, offering a private conference with Hendrickson after the public exit session. Hendrickson turned down that private conference, saying he wanted any answer to be public.

Setting aside budget issues, Hendrickson had a lot to say regarding two exit statements mentioned by Fritts, both having to do with public records requests.

According to the exit statements, the city failed to respond to one request within the five-day time limit spelled out by state law and city policy. The statement also asserts the city failed in both cases studied to fulfill the records requests by either supplying the wrong documents, or by not responding at all. Hendrickson said he had filed one of the requests and is still waiting for a full response more than a year later.

Hendrickson has been in conflict with the rest of Kenmore City Council for some time. In July, council voted to allow City Manager Frederick Stouder to sue Hendrickson for libel or slander. Stouder has declined comment on the issue, but to date there is no sign any such suit was filed.

The state has not yet released the recent audits. Audit Manager Beth Mauch said both the financial statement and accountability studies should be available to the public on the auditor’s Web site within the next few weeks.