County Takes Closer Look at Fraud Protection

County officials say that the allegations surrounding an alleged fraud and the resultant loss of funds from a local community service organization has caused them to take a closer look at fraud detection and prevention. At Monday’s Joint Administrative Services meeting, JAS Director Tom Judge said that while there is no indication that financial fraud is occurring in Clarke County, the annual County audit is not specifically designed to identify fraud and the County doesn’t have the resources for in-house fraud detection. Even so, Judge said that he believes that increasing the level of awareness about fraud prevention can help prevent abuse before it happens.

“We were looking for an additional step beyond the audit given some of the things that have happened in the community,” said County Administrator David Ash. “We look to Robinson, Farmer, Cox Associates (RFC) to give us a level of comfort that we’re not losing anything. RFC told us that there are things that we can do to help ourselves but that there is very little that they can do through an audit.”

Robinson, Farmer, Cox Associates has performed Clarke County’s fiscal audit for several years and was re-selected again this year to perform the financial review. But according to Judge, discussions between RFC and the County regarding fraud detection assistance revealed that standard financial audits do not review the transaction-by-transaction details necessary to identify financial theft.

“The audit is not designed to catch fraudulent activity,” Judge said. “The audit is designed to ensure that our invoices match our books.”

Judge said that the annual audit covers the County’s financials as well as the Industrial Development Authority, Sanitary Authority and the School Activity report.

The cost of the audit is $32K.

Clarke County Public Schools Superintendent Dr. Michael Murphy, who is a member of the JAS committee, said that complacency can be a contributing factor to fraudulent behavior and recommended selecting a different audit firm from time to time for that reason.

“It would be good to switch to a different auditor every so often,” Murphy suggested. “How long do we want the same people auditing our books? Each year we see the same faces asking the same questions and doing the same things. It’s easy to get complacent.”

Although two firms responded to this year’s County request for audit services, only Robinson, Farmer, Cox Associates was compliant with the County’s request for proposal.

Murphy added that, like the County, the school division doesn’t have the manpower to routinely investigate for fraudulent activity.

“We handle a lot of cash,” Murphy said. “I’d like to think that we have the controls in place to prevent fraud but without constantly checking it’s hard to say.”

Judge said that even though neither the County or school division has the manpower to set up a process for testing and apprehending fraudulent behavior, he believes that most fraudulent behavior in Clarke County occurs on a smaller scale and can be controlled through improved policies and employee education.

“I think that fraud here would be more along the lines of someone ordering more than the County needed of an item and then taking the leftover amount home – or someone taking home a ream of paper to print a document for work then never returning the remaining paper,’ Judge said. “If someone calls in a sick day when they’re not really sick is that fraud? – Does someone have to actually be sick or can the day be used as a leave day?”

“What if a person does a personal financial transaction online from work. Is that theft of company time?” Judge continued. “Some people would say ‘Yes’ but others would say “Oh, come on!’”

“I’m not saying that these things are happening but we don’t have the management oversight to catch everything and our policies aren’t always clear,” Judge added. “We need to communicate the expectations to the employees.”

Supervisors Chairman Michael Hobert (Berryville) who chairs the JAS committee asked Ash, Murphy and Judge if a full personnel policy review was part of the solution for reducing potentially fraudulent behavior.

“It depends on how much we want to spend to prove that something doesn’t exist,” Murphy said.

“I don’t think that Mr. Judge has the time to do a full-blown review of every policy that we have,” Ash concurred.

“We need to educate our employees and make sure that everyone is aware of what our policies are. That’s as far as I would go,” said School Board member Chip Schutte (White Post). “We have too many other fish to fry right now.”

The JAS committee requested that Judge develop a proposal for addressing areas where County policies can be tightened and to present the proposal at the JAS committee’s next regular meeting for further discussion.

“I’d like to see the issue come back here for review,” Hobert concluded. “I don’t want it to get lost if we think that it’s an important thing to do.”

The JAS committee meets next on June 25 at 1:00pm.

Comments

  1. conrad burnett says:

    I think it’s interesting to see the County is concerned about possible fraud when it comes to their school funds.
    However, for the past two years homes have been confiscated through fraudulent paper work, robo signers, false notaries and civil violations upon the people.
    The Courts have turned a blind eye to the massive fraud and corruption within Clarke County.
    Millions of dollars in real estate was unlawfully confiscated through “misrepresentations” in Clarke County courts.The denial of due process by the courts under the guise of landlord/ tenant law by banks who never lent a penny on a piece of real estate while never having to prove a valid lien.
    The public record is filled with false witness and defective chains of title .
    The people were violated while the courts and public officials turned a blind eye.
    Now, the question can be answered : “How much fraud will the courts allow?”
    This blaring hypocrisy among the board is easy to prove and convenient to prosecute.While constitutional violations of the people are rather messy and difficult to deal with.

  2. “It depends on how much we want to spend to prove that something doesn’t exist,” Murphy said. Whewww! (Redacted) does that mean? Political ambiguity? “The thing with the thing had a thing that was or wasn’t a thing”…unless it was a thing!” I give up on Berryville politics!