The Sunset Empire Transportation District is on the right track.

But everythings not all rosy, the auditor cautioned the board of directors Thursday. Theres still a lot of work to be done.

Brad Bingenheimer of Boldt, Carlisle and Smith LLC, paid the district a visit during its monthly meeting to share the findings of the audit for the 2011-12 fiscal year.

The bus district received a clean opinion on the financial statements. That being said, you still have some challenges to overcome in the next year or so, Bingenheimer said.

The auditors report reflected the progress made by the district since the forced departure of Executive Director Cindy Howe, who is awaiting trial on felony theft charges over the handling of the districts money, including using district funds to pay her personal bills. Serious financial shortfalls during her tenure led the district to suspend all but a few of its routes and lay off staff as the board of directors and interim leaders dealt with the crisis.

The auditor presented the board of directors and new Executive Director Jay Flint with a report that demonstrated that the district had $5.6 million in assets at the end of the last fiscal year.

However, with debts taken out of the capital assets and restricted funds that are allocated for the Northwest Ride Center, the district has a deficit in unrestricted funds, which led to Bingenheimers concern.

That deficit is in the amount of $1.4 million.

If you take $3 million away from $3.1 million, that doesnt leave a lot left over, he said. Thats going to be something that the district needs to be addressing actively for the next few years.

Bingenheimer also identified several deficiencies in the districts internal controls and compliance.

We look at if expenditures are reported in the correct period in your accounting records. And we noted that there were a significant number in amounts of transactions that were not reported in the right period. So that resulted in accounting entries that were proposed to the district to correct that so that the financial statements would be correctly stated, he said. But we want you to be aware that this is something the district needs to be aware of having things recorded in the proper accounting period. Its not that they werent recorded at all, they just were not in the right period of time.

Another issue noted included revenues not reported in the right accounting period and the general fund and Northwest Ride Center fund were both out of balance in the same amount.

We had to figure out what was where inappropriately so we could get those things cleaned up, although each fund is supposed to have its own self-balancing set of books, Bingenheimer said, who also pointed to some good news, such as the issues in the last fiscal year audit that have been corrected. Those included correcting the charter services provided to the cruise ships. Now cruise ship guests are accommodated by a temporary fixed route that is open to all riders.

Its been a tough few years for the district, and there are still some challenges here, but I honestly do see improvement in a lot of areas, he said. I commend you for those steps youve taken but I dont want to candy coat that there are not some things that still need to be fixed.

Flint said he felt that was a fair assessment of where the district was at. He said he realized there were still some issues but also noted that the district is actively working towards getting those issues addressed in time for the next audit.

I feel like weve come a long way in the last year, and mind you, we didnt even get a (certified public accountant) on board with us until half-way through this audit year, Flint said. I do believe this current budget year is going to have even less findings than this year, because we do have controls in place at the beginning of the year.

Its a work in progress. … Its more of a marathon than a sprint to get to financial complete compliance.

Although there is still work to be done, Board Chairman Paul Lewicki said he was encouraged by the report that recognized the progress the district has made since Howe resigned amid a slew of allegations that she bullied employees and spent district dollars for personal items like groceries and eyeglasses. Howe also traded services with St. Mary, Star of the Sea school where her daughter attended, and the Astor Street Opry Company, where she was a member. An auditor also uncovered a trade for a cruise trip in exchange for advertising with a local radio station.

Howe was charged with 10 counts of first-degree theft last spring after an indictment was handed down from the Clatsop County Grand Jury in April. The bus district nearly collapsed at the time of her departure but has since rebuilt, though not yet to full capacity.

Howe reportedly now lives in Atlanta.

Board member Carol Gearin asked if Boldt, Carlisle and Smith LLC offered a class for reading budgets to boards and although they do not, the state does put out several free resources to help assist with that. Flint also added that a workshop in Tillamook by the Department of Revenue in March. Flint and executive assistant Mary Parker will be in attendance and Flint extended the invitation to the board of directors as well.