Board chairman: Local accounting firm would spot criminal wrongdoing, if any
By Joe Beck -- firstname.lastname@example.org
FRONT ROYAL -- An investigation focusing on the financial management of the Shenandoah Area Agency on Aging is moving into a new, deeper phase involving several issues, including the possibility of criminal wrongdoing.
John Hudson, chairman of the agency's board of directors, said Wednesday the investigation will be conducted by Yount Hyde & Barbour, a Winchester accounting firm that was hired in early September to conduct an initial assessment of whether more digging was necessary.
"If they can corroborate any sort of criminal activity, they will be the ones to turn that over to the authorities," Hudson said. "It won't be the board; it will be the accountants in conjunction with the [agency's] attorney."
Hudson said he has made a verbal agreement with the accountants and will be signing a contract with them in a few days. Yount Hyde & Barbour signed a contract late last week with the Virginia Department for the Aging to conduct the same follow-up investigation, he said.
State officials stepped in after the initial accusations against the local agency surfaced in August.
Since then, the agency has been struggling under the weight of the investigation, the dismissal of three top executives, the need to maintain its varied and extensive social services for seniors, and a severe cash flow problem.
Hudson said the second phase of the investigation will examine how the agency can improve its financial management practices and bookkeeping.
"What the auditors have found so far ... is there were some loose bookkeeping systems that needed to be tightened up," Hudson said.
The investigation will also examine actions that could require a criminal investigation by the Warren County Commonwealth's Attorney office, Hudson said.
"There is nothing that has been confirmed at this point, but certainly they haven't ruled it out," Hudson said of the accounting firm. "It certainly is an active investigation to search for criminal activity or fraud that may have existed."
The SAAA is a cornerstone of the social service delivery system for older residents of the Northern Shenandoah Valley. Its list of programs includes the delivery of tens of thousands of Meals of Wheels and free transportation for thousands of seniors in Winchester and Warren, Frederick, Page, Shenandoah and Clarke counties.
The agency's troubles surfaced in August, when staff members discovered 25 or 30 unmailed checks to vendors in the desk of another staff member, agency and state officials have said.
The discovery led to the current investigation. In the meantime, the agency's executive director and two other top officials were dismissed by the board.
In late September, staff members' pay was delayed a week as the agency's finances began to buckle. A few days later, the board of directors accepted an offer from staff members to pay 20 percent of their health insurance premiums to help stabilize the agency's finances.
The state also stepped in with an emergency infusion of money to help the agency meet its payroll in late September and early October. In a further bid to ease financial strains, the board voted to raffle off a 2011 Ford Explorer that belongs to the agency.
Hudson said no date has been set for completing the second phase of the investigation, and the accountants will be paid on an hourly basis.