OAK POINT — Financial dominoes continued to fall at City Hall, as the City Council agreed to pay its audit firm, Gregg and Co., another $3,000 in order to finish the city’s annual audit.

The firm reviewed the city’s finances from October 2006 through September 2007 but refused to write a management letter re­quired to accompany it, according to Carol Roberts, a Cross Roads-based accountant hired by Oak Point this month.

“Two weeks ago, the audit was put on hold,” Roberts said, alluding to an ongoing criminal investigation into the misuse of the city’s credit card and petty cash.

The auditors told the city they would need more information for July through Sep­tem­ber 2007, in light of the investigation. In addition, the tab for Gregg and Co. to complete its review would jump from $9,000 to $12,000.

Oak Point’s former administrative services coordinator, Jennifer Ashenhart-Hawkins, 27, left her post April 18, amid the criminal investigation, and became city administrator for Rhome. She was arrested and charged with abuse of official capacity April 27. According to her arrest affidavit, $758.22 in credit card charges had been identified as questionable, and $314 was missing from the petty cash box. She told investigators she knew about the missing money but was covering for the city manager.

The affidavit also said the investigation is ongoing, and involves both Ashenhart-Haw­kins and former City Manager Richard Martin. Martin resigned his post after an executive session on April 21, but has not been arrested or charged with any crime.

Texas Local Government Code makes the audit due 120 days after the close of the fiscal year, or the end of January. A city’s bond rating is tied to the audit.

Without completing the audit promptly, the city’s financial position could be compromised, according to Roberts.

Mayor Duane Olson said Oak Point wasn’t planning to issue more bonds anytime soon. The city is still paying for some road repairs it financed with bonds several years ago, he said. 

Roberts did not specify what additional records the auditing firm sought, other than a focus on the last three months of the 2006-07 fiscal year. She cautioned that even that second look is not the same as a forensic audit.

A forensic audit looks for fraud and can cost $25,000 or more to conduct.

Olson said the city was not currently considering a forensic audit, since the investigation so far has not involved amounts that high.

Plus, the city is low on cash.

“City departments haven’t gone over their budget, but revenue is down,” Olson said.

The city needed to take steps to lower spending when it became clear that revenue would not meet projections, he said. 

Roberts told city leaders they had enough cash to make it through the current fiscal year, but the city has yet to release any documents related to the audit.

Roberts told the council members they have about $300,000 to cover city payroll and expenses until December, when 2008 property tax revenue comes in.

Preliminary tax rolls released this week show an overall in­crease of about 6 percent in total property valuations for Oak Point.  

“Every little bit helps,” Olson said.

PEGGY HEINKEL-WOLFE can be reached at 940-566-6881. Her e-mail address is pheinkel-wolfe@dentonrc.com .