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On Tuesday, the City Council voted to hire an auditing firm to examine cash handling operations in the City Treasurer's office and and other city departments.

Accounting firm Lance, Soll & Lunghard, LLP won a $9,975 contract to conduct the audit. The contract calls for the firm to look at several procedures, including cashiering activities, bank account reconciliation and processing of petty cash requests.

The audit is not limited to the Treasurer's Office, but follows news of problems within that office. City Treasurer Mike Reynolds was arrested in October on suspicion of misappropriation of public funds and two related felonies involving financial records-keeping.

The charges stem from Reynolds' transfer of about $38,000 from an account under his control to the city's general account. The prosecution has alleged that Reynolds moved the funds to hide a shortage in the petty cash fund.

Reynolds pleaded innocent to the charges in San Bernardino Superior Court on Dec. 5. His attorney, Patrick Milligan, has asserted that a subordinate employee in the Treasurer's Office failed to keep proper records of the city's petty cash funds and maintained two sets of books.

Milligan has said the problems stem from incompetence, rather than willfull misconduct, on the part of the assistant city treasurer. he has claimed that Reynolds made the transfer to prevent city funds from being short and that he was investigating petty cash discrepancies at the time of his arrest.