Panel catalogs long list of deficiencies, training shortcomings and inadequate job requirements, even after former county accountant was able to steal without detection for almost a decade
A Santa Barbara County Public Works Department accountant was able to steal about $2 million over a nine-year period before getting caught last year, and a Grand Jury investigation of the county’s financial management found “significant residual risks to the county’s finances.”
The panel’s report, released Wednesday, outlined concerns about the county’s Financial Information Network and lack of consistent financial management training, or standard job requirements, among county employees.
“Many of the noted weaknesses of FIN result in costly duplications of efforts by staff in other departments,” the report stated.
The software the county uses for its internal finances, the FIN, appears to lack basic security measures and helpful features such as accounts payable and accounts receivable, so department have created their own systems, according to the report.
After the fraud was discovered in 2017 (for which the former Public Works senior accountant, Lynn Hogan, has been sentenced to prison), the county was slow to respond, and did not even require employees to change their FIN passwords, the report found.
Hogan was accused of creating fake vendor numbers and issuing false refund checks to 10 people and two organizations, avoiding detection for nearly a decade.
“A key element that contributed to the fraud was the fact that there was no second approval (signature) required to create a temporary vendor number,” the report concluded. “A temporary vendor number is always 999999, which is assigned to a vendor, such as a consultant, supplying services to the county and is intended to be used for a single transaction; as such, there is no accumulation of payments by vendor.”
The Grand Jury found that, in wake of the fraud, that process wasn’t changed.
“Staff members were not required to change FIN passwords, temporary vendor numbers are still used even if there has been more than one transaction with the entity, and paper checks are still often used in place of Automated Clearing House transfers, increasing the risk of theft or loss,” the report said.
The county has started quarterly meetings between the Auditor-Controller and county departments’ chief financial officers, issued an “Internal Controls Policy,” and trained its accounting staff on internal controls and fraud.
The Grand Jury report includes many recommendations for the county and individual departments, including:
» Fully staffing the Internal Audit Division of the Auditor-Controller’s Office (which the Grand Jury says had 2½ positions filled out of five funded, before the embezzlement was discovered).
» Require financial management and conflict of interest policy training for department and program heads.
» Look into getting Enterprise Resource Planning software.
» Make departments account for their spending in a formal, written statement each year to their supervisors or the County Executive Office. The Grand Jury recommends “that the Santa Barbara County Board of Supervisors direct all program heads, division heads and department heads to sign annual statements to their managers, stating that all funds under their control have been managed in compliance with county financial management guidelines and the county’s Internal Control Policy.”
Allegations of conflict of interest and inadequate job qualifications were highlighted in the recent Auditor-Controller’s race between Betsy Schaffer and Jennifer Christensen. Schaffer, the county’s assistant Auditor-Controller, won the election by a wide margin.
Click here to read the full Grand Jury report on Santa Barbara County’s financial management and internal controls.
The Grand Jury report focused on internal controls, but an external monitoring review of county departments — making sure state and federal funding is spent appropriately — was released in a report earlier this year.
That report summary, for the 2016-2017 fiscal year, found several instances of departments being overpaid or having compliance problems.
Scroll down to read the External Monitoring Reports summary by the Auditor-Controller’s Office.
At the time of the monitoring review, the Santa Barbara County Sheriff’s Department was cited for not following policies and procedure, since it did not conduct performance reviews of its medical provider for the Main Jail, and the facility lost its accreditation by the National Commission on Correctional Health Care.
The Board of Supervisors has since hired a new contractor to provide medical and mental health services at the Main Jail, the California Forensic Medical Group, after blasting the previous vendor, Corizon Health.
A 2016 tour of the jail by the group Disability Rights California yielded a highly critical report of conditions in the facility, which prompted the county Grand Jury to investigate conditions of medical and mental health care at the Main Jail.
That same Grand Jury released two more reports investigating the Main Jail: one reviewing the facility itself (which the group found outdated and inefficient), and one evaluating all detention facilities in the county.
June 24, 2018
Noozhawk
By Giana Magnoli
No comments:
Post a Comment