Workers hired to check finances

Audit spurs county to reconcile records

March 26, 2000|By Scott Calvert | Scott Calvert,SUN STAFF

Still months behind in balancing the county's cash accounts, Anne Arundel County budget officials have decided to hire two temporary employees to help make sure county records agree with bank statements.

"Once we get caught up-to-date, the game plan would be to keep it up-to-date on a monthly basis," said John Hammond, county financial officer. One temporary employee started Friday, and the second is expected to start soon.

The move is the latest response to a critical audit by Arthur Andersen LLP and County Auditor Teresa Sutherland that found enough problems with the county's 1999 books to prompt a warning about the increased risk of fraud.

While much attention has been paid to an $11 million discrepancy in county billing paperwork -- a gap that has been cleared up, Hammond said -- a Georgetown University accounting professor said the county has shown "serious errors and problems" in tracking its cash.

"If I were the auditor on this job, I would be very concerned," said Scott Whisenant, who reviewed the auditors' nine-page overview letter at The Sun's request.

"This is an organization whose mission is effective control of assets entrusted to it," Whisenant said. "This says they can't even control something as basic as cash."

After uncovering a host of problems -- from cash entries recorded twice, in the wrong month or not at all -- auditors had to make $6.9 million in adjustments to the county's records of its cash. The county's operating budget is about $730 million.

While no money is missing, several County Council members criticized the county finance office's lax oversight.

County Executive Janet S. Owens has taken steps to reassure the public and County Council since the audit's release March 14. She announced plans to re-establish an independent controller's office, hire two more accountants and examine whether the company that supplied the One World financial computing system fulfilled its contract.

The county is verifying October's bank statement, Hammond said, and has not begun examining statements for November through February. Hammond blames the backlog on staffing problems.

"It's a legitimate issue," he said.

For years, auditors have recommended tighter financial controls, such as verifying cash amounts by regularly comparing bank statements and county records. During the 1990s, five embezzlement investigations in various county departments involved cash, and a detention center employee was convicted of stealing an estimated $60,000 from inmate accounts.

Certain county agencies have been criticized for not being stringent with their cash policies. In 1996, a county audit found that the same librarian could accept and waive fines. Library officials balked at separating the duties because they said their focus was on serving customers efficiently.

Whisenant said cash is "inherently risky" because of the ease with which it can be stolen, compared to property or inventory.

"If you can take my cash and put it in your pocket, it quickly becomes your cash," he said. "When you're entrusted with other people's dollars, it seems that should be priority No. 1."

Aside from increasing the likelihood of theft, Whisenant said poor cash control raises broader questions, such as whether taxpayer dollars are being spent efficiently.

Auditors found that:

Significant amounts of cash receipts were recorded by banks but not posted to the county's general ledger.

Cash receipts from July 1999 were posted to the general ledger in June.

Cash disbursements from July 1999 were posted to the general ledger in June.

Some reconciling entries from the end of the fiscal year June 30 were not recorded until October.

Some entries were recorded twice.

Banks were not notified of voided checks in a timely manner.

The payroll account had checks outstanding since March 1998.

County Council Chairman Daniel E. Klosterman Jr., who has an accounting business, was dismayed by the audit's findings, but he said he is heartened by the county's responses.

"The key is they're addressing the problems in a businesslike manner and putting in the right controls and doing things that have to be done," he said. "That adds some comfort."

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