A county audit found “serious lapses” in cash handling and financial oversight at the San Luis Obispo County Department of Veterans Services, according to a report filed one month before the agency’s director abruptly resigned in September.
In a strongly worded response, former Director Dana Cummings refuted much of the financial review and blamed some of the findings on lack of an accounting staff and bad timing.
The county Board of Supervisors is scheduled to receive and approve the review when it meets Tuesday.
On April 15, staff from the County Auditor-Controller-Tax Collector’s Office conducted an in-person review of all cash and receipts on hand at the time as well as a review of internal controls and cash handling procedures. The auditors found that all cash was in balance but identified four “serious lapses” in how the office handled cash and checks. Auditors also found four minor areas that needed improvement but not deemed serious enough to require immediate action.
The review filed in August does not state why it was done.
Among the “serious” findings, the review states that Cummings performed all functions of collecting and depositing cash and reconciling the department’s receipts, in conflict with county policy that requires handling and recording duties to be done by different employees.
“When one individual has control of more than one key aspect of a transaction, the risk of error and the opportunity for misappropriation significantly increases,” the document reads. It does not state that any misappropriation occurred.
Despite a county policy that requires checks greater than $500 to be deposited the next business day, some checks were found to be up to five days late in being deposited, including one check for $16,694.
“Cash receipts that have not been deposited increase the risk of loss or misappropriation,” the review stated.
The department regularly receives checks from local, state and federal agencies, community organizations and grants to pay for some staff salaries, supplies and programs.
The review also states that receipts were not being provided for cash or check transactions at the department office or at department-sponsored events, despite a policy that they should be prepared immediately. The Auditor’s Office noted, however, that receipting requirements could be modified for certain events such as fundraisers.
Lastly, the review found that employees hadn’t signed the county’s Information Technology Acceptable Use Policy as they are required to do once a year. The document defines procedures for computer use to all county employees.
In addition, auditors found several minor issues, including: that bus passes and a receipt book were left unsecured, that Cummings and his staff had not certified that they read the county’s cash handling policy, and that Cummings used a personal credit card to buy food for a fundraiser and gift cards for clients.
Cummings responded to the report on Aug. 19.
“Though the Department does not find the report completely inaccurate, the Department Head opinion is that there are serious discrepancies in how the report presents the situation within Veterans Services,” Cummings wrote.
Though he said it is “simply not true” that he was handling all cash collections, deposits and receipts, Cummings said he had handled the majority of those jobs “due mainly to staffing issues.” The department lost the employee previously responsible for those duties, Cummings said, and a replacement had just started at the job a week before the audit. Cummings added that the department receives more cash collections than usual in the months of April and May, leading up to its Veterans Stand Down event, held one weekend a year to provide information and services to at-risk and homeless veterans.
Cummings acknowledged the untimely deposits, saying that “the Department has never had adequate accounting staff.” He said he had tried for three years to address the problem but was “told on several occasions that the Department would not get that type of support,” the response reads.
He said donors do receive receipts and thank-you letters for checks written to the department, but not receipts from an official receipt book. He said the department has not accepted cash donations since last year.
Regarding the computer policy, Cummings said he was simply unaware that he and his staff were required to sign the document each year.
He said all of the recommended changes were being implemented.
However, he also took issue with the minor findings, responding that bus passes are guarded and tracked, and that there is no need for an office receipt book because they do not accept cash. He also said he never used his personal credit card for department business, but used a county corporate card and that all purchases had been tracked electronically.
He said the bus passes had been provided to participants of SLO County’s Veterans Treatment Court in order for them to arrive to court hearings on time, and Subway gift cards were handed to homeless veterans after the Stand Down event.
In closing, Cummings wrote that the audit “was a good experience” for the department but urged the county Board of Supervisors to approve an additional accounting staff position.
Cummings resigned suddenly Sept. 9 after four years as the department director. On Wednesday, he said county administrators have long known the department was understaffed.
“Every other department has accounting staff. Why is this (department) different?” Cummings said. “I asked for three years, and they refused to give me the staff to do the things that need to be done. They can’t have it both ways.”
Because of a confidentiality agreement, Cummings has not revealed a reason behind his departure.
On Tuesday, the county appointed U.S. Navy Cmdr. Paul Porter as interim director of the department, which has nine full-time staff members and operates on an annual budget of $500,000.
When Cummings departed, the department had 10 full-time staff members and two temporary employees.