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Posted July 13, 2012 | 6 Comments
SAAA 2011 audit finds flaws, suggests improvements
By Joe Beck - firstname.lastname@example.org
An independent audit of the Shenandoah Area Agency on Aging's finances for fiscal year 2011 released Friday depicts an agency in crisis weeks after the dismissals of the agency's three top executives last year.
John Hudson, executive director of the agency's board, said after a board meeting that the audit contained "no surprises" after months of lawsuits and investigations by government agencies into SAAA's financial turmoil.
The dismissals of executive director Helen Cockrell, director of development and community relations Ann T. McIntyre and finance director Jim Shaffer in September form the backdrop to the audit conducted by Winchester accounting firm Yount Hyde and Barbour.
Although none of the three is mentioned in the 31-page audit, several parts identifying "material weaknesses" and "significant deficiencies" in financial reporting and internal controls over major agency programs closely track issues raised by the board in dismissing the administrators. The audit also addresses some financial irregularities revealed last year in an investigation launched by a state agency into SAAA's management practices.
That investigation by the state Division for the Aging has led the Virginia State Police to investigate SAAA for possible criminal wrongdoing in the management of its finances.
The results of the state police investigation are still pending.
Among the auditors' findings, under a category listed as "segregation of duties," is the following finding: "We noted the former executive director's signature was printed on checks during the check printing process. A second manual signature was not required."
The audit states the effect of such a practice was to leave the accounts payable clerk "in complete control of cash disbursements during this time period. Requiring checks to be manually signed by two authorized check signers can prevent unauthorized check disbursements."
The agency has accused Cockrell of embezzlement in a lawsuit filed as a counterclaim to a suit that Cockrell filed challenging the circumstances of her dismissal. The agency's complaint asserts Cockrell paid bills from a company identified as "RLS Associates" with two checks from SAAA "when no money was due RLS Associates from SAAA."
The audit notes that the agency has begun requiring checks to be manually signed by two authorized persons in this fiscal year to "prevent unauthorized cash disbursements."
"To improve this control, we recommend that supporting documents be attached to checks to be signed and such documents be reviewed by the person signing the checks," the audit added.
Other findings and recommendations in the audit dealt with issues such as a formal review of the executive director's hours; credit card transactions lacking proper documentation; and the lack of a formal purchase approval process that led the agency to buy an SUV for Cockrell's use without any indication in board minutes that the directors approved the purchase.
Hudson said after the meeting the agency is on a path to recovery from its fiscal woes, although it still owes a large amount money to vendors, and the agency's legal conflicts with Cockrell remain scheduled for trial in October.
Hudson said the addition of a part-time certified public accountant to the staff has done much to bring order to the chaos that existed in fiscal year 2011.
"The finances have significantly improved," Hudson said, adding that the agency has a chance of reaching its goal of a balanced budget when this fiscal year ends Sept. 30.