Lack of money controls results in problems, theft investigations Auditors warn failure to divide duties leads to costly mistakes

October 30, 1998|By Andrea F. Siegel | Andrea F. Siegel,SUN STAFF

Basic money-handling shortcomings have exposed several Anne Arundel County government departments to embezzlement and costly errors, the county auditor says.

Audits repeatedly recommend that departments handling payments from the public divide money-taking and record-keeping duties among several employees to provide a systems of checks and balances.

But sloppy bookkeeping often goes unchanged until an obvious problem surfaces.

"You are creating an opportunity for one person to take money and cover it up," county auditor Teresa Sutherland said.

County officials said that as much as is practical, they do follow Sutherland's recommendations. But setting up financial safeguards is expensive.

"You have to balance that issue out," said County Executive John G. Gary, who has clashed with Sutherland.

Lack of financial controls has led to warnings and to at least five embezzlement investigations in as many years. Audit reports of some county offices describe bookkeeping so poor auditors could not tell if there were financial irregularities.

Recent audits, department memos, court records and interviews indicate problems in:

Planning and Code Enforcement's licensing division. In a March report, auditors could not find deposit records for $4,375 in 1997 one-day licenses. They faulted the licensing division for not taking payments at a single cashier's office. The state's attorney's office is conducting a criminal probe.

Anne Arundel County Detention Center. Auditors, who reported last year that at least $50,000 was missing from an inmate account, criticized the jail for an absence of internal controls. The former head of the inmates commissary kept the account records, tallying deposits and reconciling the accounts. In August, she was charged with theft. Alerted by the finance department in 1995 to a problem in the account, jail officials called in police, but the inquiry was dropped when jail employees refused to cooperate. Gary said a planned sting operation was short-circuited by Sutherland's audit. In a dispute between Gary and Diane R. Evans, then County Council chairwoman, Evans referred the matter to the county prosecutor. The jail has changed its money-handling practices.

Landfill. A joint auditor-finance report more than seven years ago warned that the county landfill was vulnerable to corruption. In 1995, public works officials installed hidden video cameras and documented two scale operators recording false weights for trash haulers, then collecting lower fees in exchange for gifts. The scam cost taxpayers between $1 million and $5 million, prosecutors estimated. Four people pleaded guilty to theft, and the county has installed video cameras and tamper-proof automated scales at a cost of $602,000.

Animal control. In March, auditors criticized many practices at the animal shelter. They said clerks who handle money also issue licenses and enter information into databases. The auditors recommended seperating the duties. Thomas C. Andrews, the county's chief administrative officer, said changes were made and others are in the works. Animal control has been moved from Planning and Code Enforcement to the Police Department.

Libraries. The sums are pocket change, but in 1996 auditors faulted the library for, among other things, allowing the same librarian to waive and accept fines, post payments to borrowers' records and arrange deposits. At one branch, the safe's combination was posted above the safe. Officials balked at many recommendations, saying their focus was on customer service. In March, County Council Chairman Bert L. Rice met with library officials and auditors to work out a compromise.

Board of License Commissioners. Auditors criticized the tiny two-clerk office in 1996 for not dividing money-handling duties and recommended changing the law so that the county finance department would take liquor board payments. Board Chairman Richard C. Bittner said both employees have to be able do everything because sometimes only one is present. He did halt the practice of accepting cash, though auditors also expressed concern about possible check theft.

Public works. In 1995, a public works water-line supervisor stocked his three-bay backyard auto shop with at least $158,000 in county supplies. He pleaded guilty to theft. Public works has overhauled its purchasing system.

State's attorney. After a lawyer in the office stole $12,500 in 1994, money-handling practices were changed. But in December, the auditor faulted the office's $500,000-a-year drug asset forfeiture program for not having the kind of internal controls that keep money from disappearing. No money was lost, but Sutherland questioned nearly half the sales. State Prosecutor Stephen Montanarelli found no criminal wrongdoing, but new procedures include more county control over seized vehicles.

The president of the National Association of Local Government Auditors said he is hardly surprised to hear about employee thefts where financial controls are not stringent.

"I don't know anybody who is in auditing who hasn't seen a segregation of duties theft," said Jerome J. Heer, an auditor from Milwaukee County, Wis. "Invariably what we do hear from people is 'Gee, I thought that was somebody I could trust.' Well, nobody is ever ripped off by somebody they don't trust."

Rice said, "People get mad at the auditor. That's not fair. Her job is to identify shortcomings that if fixed would preclude the loss of resources."

Department managers, he said, may be experts in their fields, but not in fiscal procedures. "I think we are going to have to do some training in that area."

Some $8 million in improvements coming to the county's decade-old computer system by the turn of the century should help. Currently, some computer systems within departments cannot communicate, and information must be entered manually, which increases the chance for errors.

Pub Date: 10/30/98

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