MUSCATINE, Iowa — A state audit requested by city of Muscatine officials and released Monday turned up more than $18,000 in undeposited collections, a crime that led a former city senior accounting clerk to plead guilty last month to first-degree theft charges.

According to court records, Diane Fry accepted the guilty plea last month after prosecutors dropped counts of felony misconduct in office. Her sentencing is set for 9:15 a.m. Friday, April 12, in Muscatine County District Court.

Muscatine County Attorney Alan Ostergren said the plea agreement calls for Fry, 54, to make a restitution payment of at least $8,500 at sentencing. That amount will cover the city’s deductible for its insurance against employee theft.

The city recouped the remainder of the money from its insurance policy. The insurance company could pursue action to recoup its money from Fry, but there was no word Monday on whether that would happen.

In addition, said Muscatine Finance Director Nancy Lueck, authorities will seek the approximately $5,600 it cost the state to perform the audit.

An audit report issued Monday by the office of State Auditor David Vaudt said that $18,054.70 hadn’t been deposited into city accounts — $15,444.70 from the public housing program and an additional $2,610 of General Fund collections, including tattoo inspection fees and the sale of yard waste bags.

The audit ran from July 1, 2008, through March 8, 2012.

According to the audit, one of Fry’s duties for the city was to maintain the accounts of public housing tenants. The audit said that the undeposited collections resulted from alterations to receipts, a manual ledger, deposits, a computer system, and a combination of the four.

Vaudt reported it wasn’t possible to determine if other collections were not properly deposited because adequate records were not available.

The audit determined that an additional $4,913.62 should be paid from the General Fund to fully restore the public housing program.

But Lueck said that $2,373 of that amount has already been restored and that each of the current tenants whose accounts were affected by the crime has been made whole.

The rest of the money would have gone to tenants who have moved away. Some are no longer alive, she said, so that money has not been transferred from the General Fund into the public housing fund.

According to Lueck, the city made improvements to its internal controls shortly after the fraud was discovered, including:

• Changes in the public housing software system so that transactions can no longer be deleted by anybody except Finance Department supervisors

• All “key” numbers in the housing computer system are now being accounted daily, and all receipt numbers are assigned by the computer system

• Daily deposit reports from the computer system are run daily and balanced to the bank deposit for each public housing facility

• The public housing program and Hershey Manor housing programs are now fully computerized and the manual ledgers have been discontinued

• License and permit revenues are being reconciled with backup documentation.