Charlotte Observer----
Mecklenburg County Gov't offers greater detail on steps taken to fix DSS
(From Mecklenburg County Manager Harry Jones:)
The Charlotte Observer has published several articles and editorials regarding financial management and audits in the Department of Social Services. Despite this extensive coverage, there are details about the county's response that we feel should have been discussed more fully than they were in Observer stories.
Actions taken in response to the audit findings were reported to the Meck. Board of County Commissioners on June 16, and discussed in detail by the board's Audit Review Committee on June 24. The board further discussed these responses on July 7 when it received the ARC's report. At this same meeting, the board discussed the external auditor's written statement that management's responses appear “appropriate to resolve the noted issues.” To ensure the public is aware of all the steps being taken to fix DSS, we provide the following:
1) DSS no longer processes department financial transactions through a separate bank account. All DSS non-guardian transactions are now processed from the main county account through the county finance department, requiring signatures of the county manager and finance director.
2) DSS employees are being trained or retrained on financial policies and procedures. Work plans are being updated to include accountability and adherence to these.
3) The county's agreement with the Good Friends program ended in March, with the county refunding Good Friends $45,318.
4) Prior to the audit, DSS Director Mary Wilson halted the use of vouchers pending the review. Subsequent to audit findings, DSS permanently discontinued the use of vouchers. DSS now makes purchases through approved procurement cards and other procedures using stringent controls overseen by county finance.
5) Funds managed by DSS on behalf of Social Security beneficiaries are segregated from other funds. Only expenses related to Social Security guardian funds are expended from this account.
6) The county finance department identified all credit cards in DSS and throughout the organization. These cards have been destroyed and the related accounts have been closed, with a few exceptions that are warranted and approved.
7) We requested that the Charlotte-Mecklenburg Police Department investigate questions about the use of Giving Tree donations. In partnership with CMPD, we will aggressively pursue any evidence of suspected misappropriation of funds to the appropriate conclusion. The CMPD investigation is ongoing.
8) The county manager's office directed the human resources department and the county attorney's office to determine necessary employee disciplinary action, including termination as appropriate. This action is underway.
9) All Giving Tree activity was halted at the beginning of the investigation and remains so.
10) Further follow up also is underway. County staff is preparing additional reviews based on questions raised by commissioners. These plans will be provided to the ARC at its next meeting.
In September, we also will supplement existing reporting protocols by implementing an employee report line. This will add another option for employees to report concerns they may have about financial management practices.
Finally, to ensure Transparency, public documents and video of BOCC discussions related to the DSS audits are available online at www.MecklenburgCountyNC.Gov.
Foxes or Not, Others Need To Watch County Hen House
There's an obvious conflict of interest going on in Mecklenburg County Government, and commissioners should make it a priority to fix it.
The Meck. county's Audit Review Committee is tasked with overseeing independent audits of the county and responding to their findings by making recommendations to the full board of commissioners. In carrying out this role, it's not uncommon for the committee to need to review the performance of top county administrators, including the county manager.
Here's where the conflict arises: The committee is made up of two county commissioners, one community member and two members of the county management staff. In other words, the top brass is largely responsible for determining how county management has performed when its performance is in question.
It's evident such an arrangement poses a conflict. Even if the members of county management were to have the best of intentions, the arrangement undercuts the committee's credibility. The public can't feel confident that an independent review has been done.
Most recently, the committee reviewed misspending at the Department of Social Services and management's response to the problems there. Recent financial audits revealed the county cannot account for $162,000 meant to buy Christmas gifts for poor children. Commissioners have said they may never know just how much money is missing or what happened to it.
DSS hadn't been fully audited in 13 years. As county manager, Harry Jones said he deserves to be held accountable.
But Jones himself is on the Audit Review Committee, along with one of his top assistants, John McGillicuddy. The committee's report to commissioners last week agreed with an outside auditor's finding that Jones and his team had acted appropriately in responding to problems at DSS. The primary author of that report? McGillicuddy himself, with the support of Jones, to whom he reports.
Whether management's response was adequate or inadequate, the public's faith in the legitimacy and comprehensiveness of the report should be shaky. As when a police officer is investigated for killing a civilian, the only review that has credibility is a truly independent one.
Supporters of the committee's makeup say it allows management to provide commissioners with useful information. But clearly they can provide that same information without sitting in judgment of it.
We applaud Democrat Harold Cogdell and Republican Bill James for questioning how the committee was designed. Now the full board should vote to have it include four commissioners, two from each party, and one community member – and not have management review itself.
Make-up of DSS Audit Review Panel Is Criticized
The makeup of a panel investigating alleged misspending at the Department of Social Services has come under scrutiny after it concluded top Mecklenburg County managers took proper steps to address accounting failures.
Two of the five members of the Audit Review Committee are county administrators – County Manager Harry Jones and one of his top lieutenants, John McGillicuddy, who helped write the report.
Some commissioners say the arrangement undermines public confidence in the probe and hinders the committee's ability to find out who's to blame. The report was presented to the county board of commissioners this week.
“It seems odd to me that our county manager and an assistant county manager who reports to our county manager would be a part of a committee to make a determination about whether management responded appropriately,” Commissioner Harold Cogdell said. “It undermines to some extent … the appearance of what this committee is charged with having done.”
Commissioner Dan Murrey, a member of the audit committee, said members will look into whether they should remove administrators from the panel in the future.
Supporters of allowing managers on the panel say it does not compromise investigations and allows administrators to provide commissioners with useful information.
The committee is investigating DSS programs, including a Christmas charity that solicited public donations. Recent financial audits revealed the county cannot account for tens of thousands of dollars from spending programs meant to help children and poor families.
Officials said they may never learn what happened to the money because receipts are missing or altered.
Some commissioners have said Jones and other top managers should shoulder some responsibility. Jones met with commissioners in closed session this week to discuss the issue.
County officials established the Audit Review Committee in 1998 to oversee financial audits and make recommendations to the commissioners. The move followed the indictment of former county elections director Bill Culp, who pleaded guilty to taking $134,000 in bribes and kickbacks.
The county set up the committee so it must include two commissioners, two county administrators and a community member.
Jones and McGillicuddy, county general manager, are the administrators on the committee. Murrey, commissioner Bill James and certified public accountant Ward Simmons are the other members.
Earlier this week, the panel presented a report to the board of commissioners that is critical of the accounting practices at DSS and says further investigation may be needed.
But the report endorses reforms county managers made in response to problems found by auditors.
“Management's responses to the audit findings are appropriate and sufficient in strengthening internal controls and addressing inconsistent and insufficient supervision,” the report says.
McGillicuddy wrote a draft of the report and took suggestions on revisions from other committee members.
McGillicuddy and James disagreed about what committee members had concluded during a meeting.
In an e-mail to committee members and officials, James suggested the report say: “Management's responses to the audit findings are not appropriate and sufficient in strengthening internal controls and addressing inconsistent and insufficient supervision because they do not determine who at DSS was responsible for the inconsistent and insufficient supervision (lack of control environment) and because Management cannot determine how long the control environment has missing from DSS Finance.”
McGillicuddy objected, writing back that James' statement was inaccurate. Murrey and Simmons sided with McGillicuddy.
McGillicuddy told the Observer he volunteered to write the report and “provided this draft to all the members for revisions until the members were satisfied with the report that was provided to the Board in its agenda.”
Commissioners originally appointed McGillicuddy to the audit committee in 2004.
“I hope that my participation on the Audit Review Committee has provided expertise and insight from a management perspective that is useful to the overall charge of the committee,” he said.
Jones did not return calls or an e-mail seeking comment.
Commissioners have long debated whether to keep administrators on the Audit Review Committee.
James said he unsuccessfully lobbied to keep county managers off the committee when it was formed. The presence of administrators prevents the panel from conducting fully independent investigations, he said.
In the DSS case, Cogdell said the committee structure could raise negative public perceptions.
“The makeup would have instilled a little bit better public confidence if you had members of this board in conjunction with some type of outside auditing agency and not someone that the outcome of the recommendation is in some way going to impact or show ... you did a good job or you didn't do a good job,” he said.
Former commissioner Parks Helms said he can understand why some say the arrangement represents a conflict of interest. But Helms said he supported putting administrators on the committee to provide intimate knowledge about the daily workings of county government.
“I never thought having members on management would compromise the integrity,” said Helms, who is former member of the Audit Review Committee. “They are just as interested in finding errors as members of the board.”
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Sources: Charlotte Observer, Charmeck.org, Google Maps
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