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Chairman: Agency faces 'short-term cash-flow problem' amid financial probe

By Joe Beck -- jbeck@nvalleycom

FRONT ROYAL -- Accusations of shoddy financial management and possible fraud at the Shenandoah Area Agency on Aging haven't harmed programs and services, but a short-term cash-flow problem needs to be solved quickly, the chairman of the agency's board of directors said Wednesday.

Chairman John Hudson said the board is "driving the train" as the agency tries to work through an investigation of its finances and the related firings of three top staff members.
Hudson admitted the investigation begun earlier this week is "a bit more than a distraction" for the agency.

"There is a short-term cash-flow problem the board is wrestling with, and we are trying to come up with a solution as soon as possible so services don't get delayed or canceled," Hudson said.

The agency provides a variety of services to older people in Winchester and Warren, Clarke, Shenandoah, Frederick and Page counties.

A Winchester accounting firm hired by the board began combing through the agency's books earlier this week. The board took action after learning from staff members that 25 to 30 unmailed checks, some six months old, were found lying in the desk of another staff member. The checks, discovered in early August, were payable to vendors.
The staff also discovered that the Agency on Aging lacked money to cover the total amount of the checks.

In the aftermath of the disclosures, the board dismissed Helen Cockrell, president and CEO; Ann McIntyre, director of development; and Jim Shaffer, the agency's finance director. Hudson said the board has yet to decide how much, if any, severance pay the dismissed executives will receive.

The probe begun this week will determine whether a follow-up investigation is needed to determine whether fraud was committed. Hudson said he expected it would be complete within a few days.

The board is working under the watchful eye of the state Department for the Aging and Department of Rehabilitative Services. For now, those two agencies have stepped back and allowed the board to operate with minimal involvement in the investigation, said Jim Rothrock, commissioner of the Virginia Department of Rehabilitative Services and interim commissioner of the Virginia Department for the Aging.

Rothrock and Hudson both described more intense involvement by the state in the days immediately after staff members disclosed the agency's financial irregularities.

Hudson said the board told the state agencies about its troubling discoveries, and the state quickly decided to investigate. State officials concluded that swift action was needed to begin clearing up the problems they found.

"We were told very bluntly that if the board didn't come up with a course of action, the state would," Hudson said.

The agency's top executives were fired shortly thereafter.

"Their terminations were related to the allegations," Hudson said.

In a related matter, the Winchester City Council is scheduled Tuesday to consider a resolution to suspend its contributions to the Agency on Aging until the investigation is complete.

Warren County Administrator Douglas P. Stanley issued a written statement Friday giving a vote of confidence to the agency. The county has processed a payment of $10,000 to the agency for the second quarter of the fiscal year, Stanley said.

"I am comfortable with the oversight that is in place to ensure that funds are being spent appropriately coupled with their engagement of an outside audit firm to look into the issues that have been raised," Stanley said.