The audit said the county owes the state $47,907. That money has been paid back, said James Mason, comptroller of the authority.
"We made every effort to obey all the policies and procedures as we understood them," said the Rev. Andrew Cooney, chairman of the authority's board of directors.
"We've taken steps to clear up the situation as best as we could."
The authority's functions include targeted case management of mental health clients. Funding for some service providers also flows through the authority's accounts.
Among the accounting problems detailed in the audit were "numerous discrepancies" on time sheets, including the need for proper authorized signatures. The executive director also did not complete a time sheet.
The audit also says the county authority spent $5,036 on a computer for the regional state official that oversees how the authority spends state grant money. The computer was returned as a result of the audit, which says the purchase had "the appearance of impropriety."
Bayless said the computer purchase was only meant to be a short-term loan.
The audit also criticized the inaccuracy of the authority's year-end surplus reports. Surpluses can be carried over to the next year with an approved spending plan, but if surpluses are large, the state may take some of the surplus back, according to the audit.
In 1995, the surplus was reported to be $64,059, but an audit later showed that the surplus was $560,310. Mason said the reported surpluses were estimates that didn't pan out. He said confusion over what should be reported in the surplus and lower than expected reimbursements for services contributed to the discrepancies.
"I'm pretty fuzzy on this stuff," Bayless said.
But he said the authority had done what the state asked them to do.
"We were willing to do it however the state told us to do it."
Bayless said he felt the auditors were changing the rules for financial reporting two or three years after the fact.
"For me it's unreasonable for them to expect me to be a mindreader. There's lots of ways to slice the data."
Bayless, who had been the only director in the seven year history of the authority, said other audits of the authority didn't come up with the same concerns.
"I think we were doing the best we could with the guidelines that were given us."
Bayless said the $47,907 the county had to return to the state wasn't bad for a government agency. "It sounds like a pretty good record to me, all things considered."
The Washington County Mental Health Center Inc. had blamed problems with the authority's accounting in part for its financial problems in 1995, when it had to lay off staff and borrow money to stay afloat. The center's billing and accounting at that time was handled by Mason through the authority. Billing problems cost the center thousands of dollars when a health insurance company refused to reimburse the center for services they provided. The center has since hired its own business manager, cut its budget from $3 million to $2 million, and has seen its financial health improve.
Mark Lannon, the center's executive director, said their relationship with the authority has improved significantly since 1995.
Lannon said the center now operates its programs through Maryland Health Partners, rather than receiving state grants through the authority. Maryland Health Partners is a private firm contracted by the state to manage health care for state residents on medical assistance, Lannon said.
The audit also said the authority had to return $379,575 of federal grant money for Medicaid in 1994. Mason said that was because fewer Medicaid patients used services paid for through the authority than projected.
"It wasn't like that was excess grant money that we could spend for other services," Mason said.
The audit also cited a failure to record costs for some programs, including ones administered by the authority itself.
"It appears that the authority uses these contracts as a guide, but does not require strict adherence to all the contract provisions," the audit says.
Mason said the authority also has asked the state to try and do their audits in a more timely manner.
Cooney said the authority was seeking advice from the community on the job description for executive director. Cooney said the board would probably advertise the opening in January or February.