Press Release: Auditor General DePasquale Alarmed with Handling of Public Funds by Luzerne County Sheriff’s Department

Audit finds repeated problems and lack of oversight dating back nearly 15 years

HARRISBURG – Auditor General Eugene DePasquale today demanded aggressive changes at the Luzerne County Sheriff’s Office to finally fix chronic lapses in handling of public funds, including some issues which date back over a decade.

The failures were repeatedly identified in three consecutive audits dating as far back as 2000, yet continued to be ignored with little changes.

“Until the necessary corrective action is taken, there is an environment conducive to fraud. I am extremely concerned about how these issues continued to linger on for over a decade. This can’t go on. Luzerne County residents deserve better,” DePasquale said.

The latest audit, which covered March 1, 2008 to Feb. 28, 2013, identified four specific findings — three of which were identified in two prior audits dating back to 2000.

Auditors found:

• Daily deposits were not made on time and often did not match receipts.

• There was no accountability over undisbursed funds. There were no liability reports to indicate to whom more than $9.1 million was due.

• There were 414 outstanding checks worth $394,361.

• Payments due to the commonwealth were late and often did not match other reports or records. As of the end of the audit, the department still owes the commonwealth $77,829 from a missed payment in 2011.

“The handling of public funds was sloppy, chaotic and worrisome,” DePasquale said. “In fact, the testing of deposits and receipts during the audit was almost impossible. Money owed to the commonwealth was consistently late or, in one case, not made at all. And, there is nearly $400,000 in outstanding checks just sitting in an account, some dating as far back as 2008.

“There is also $9.1 million in bank balances with no records indicating to whom it belongs. Auditors found that monies were not deposited on the same day as collected and often didn’t match the receipt records. That’s breathtaking. The taxpayers deserve better,” DePasquale said.

Because of the audit, several changes are proposed or are underway to improve the handling of funds.

During the audit period there was chronic turnover in the Luzerne County sheriff’s office. In the current audit period which covers five years, there were four different sheriffs.

DePasquale said he sees a willingness to make changes under current sheriff, Brian Szumski, who has initiated several audit recommendations and has promised to make consistent and timely payments of monies and fees owed to the commonwealth.

“The sheriff will need the support and resources of the leadership of Luzerne County to make this office credible and transparent,” DePasquale said.

The audit findings showed a systematic failure of checks and balances, DePasquale said, including:

Finding One: Inadequate Internal Controls Over Receipts – a recurring finding.

• Of the 43 deposits tested, 22 were not deposited on the same day. The lapses ranged from two days to 19 days. Sixteen of the deposits did not match bank deposit slips.

Finding Two: Inadequate Controls Over the Bank Account – a recurring finding.

• There were adjusted bank balances of $7.5 million in the general account and $1.6 million in the real estate account without corresponding liabilities to whom the monies are due — that $9.1 million was an accumulated balance as of Feb. 28, 2013.

Finding Three: Inadequate Outstanding Check Procedures

• An examination of the general fund found 414 outstanding checks totaling nearly $400,000. The checks date back to April 2008 to August 2012.

Finding Four: The Commonwealth’s Portion of Revenue was not Transmitted Timely – a recurring finding.

• The audit found 26 of 27 payments to the state’s Office of Comptroller were not transmitted in the required time. The lapses range from 10 days to 136 days.

• One of the 27 payments for $77,829 was not remitted at all for the period of March 1, 2011 to Aug. 31, 2011.

“Without the proper procedures and accountability, I am not confident that the money is being handled properly and appropriately. Things must improve immediately,” DePasquale said.

A copy of the Luzerne County Sheriff’s department audit report is online here.

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