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Auditors list numerous problems in forensic report of finance dept.

Aaron Danzig, an attorney from the law firm of Arnall Golden Gregory LLP, reads a summary of a forensic audit report that blasted former county Finance Director Angela Jackson’s fiscal leadership on Tuesday. Arnall Golden Gregory was hired to work with auditors from the White Elm Group on the audit. (Staff Photo: Curt Yeomans)

Aaron Danzig, an attorney from the law firm of Arnall Golden Gregory LLP, reads a summary of a forensic audit report that blasted former county Finance Director Angela Jackson’s fiscal leadership on Tuesday. Arnall Golden Gregory was hired to work with auditors from the White Elm Group on the audit. (Staff Photo: Curt Yeomans)

JONESBORO — Clayton County commissioners got their first taste of a forthcoming forensic audit report on the county’s finance department Tuesday, and it was a biting criticism of the department’s former leader.

Aaron Danzig, an attorney who worked with auditors from the White Elm Group, told commissioners that between 2009 and 2012, the finance department operated with “dysfunction” and put the county at risk for fraud and abuse.

He also accused former Finance Director Angela Jackson of leading the department with an autocratic style and not properly sharing with other department heads. In the case of at least one department, there was confusion over how much money was available to its leaders, the attorney added.

“The finance department, and other county departments, lacked the policies, procedures and controls with respect to financial management that should be present in order to provide the necessary transparency to instill confidence that county leaders have been responsible guardians of county funds,” Danzig said.

Audio clip

Clayton County forensic audit presentation

“Based on our analysis, the absence of such policies, procedures and controls lead to an opportunity and environment of self-dealing, fraud and potential abuse,” he added.

Tuesday’s presentation was 13 months in the making. The forensic audit was ordered in January 2013, at the first commission meeting with Chairman Jeff Turner and Commissioner Shana Rooks. Such audits of all county departments had been a campaign promise the previous year.

Although the final report on the department is not yet finished, Tuesday’s presentation paints a scathing picture of the department.

Danzig said the auditors looked at contracts and accounts payable, special purpose local option sales tax accounts and the county’s fire fund. More than 10,000 pages of documents were reviewed and dozens of county employees were interviewed by auditors, he said.

“It appears the former finance director exercised total control over the department, restricting the flow of information to department heads and commissioners and also directing actions be taken by her staff that may not have been in the best interests of the county,” Danzig said.

Poor contracts and invoice management

While looking at samples of contracts and accounts payable transactions, Danzig said auditors looked to see if the county entered into contracts properly, if invoices were taken care of properly and if vendors were paid accordingly.

“However, our review was hampered by a lack of formalized and consistently followed policies and procedures, including with respect to contracts processing and accounts payable, which limits the county’s ability to monitor contracts and payments,” Danzig said.

Written policies for accounts payable were among the policies that could not be found, Danzig said. He added the county’s accounts payable manager told investigators attempts to implement formal procedures were “stymied” and staff were therefore unable to “play a gate-keeping role in ensuring that invoices were proper and goods and services were actually provided.”

Jackson sometimes overrode accounts payable staff and would “instruct invoices be paid without a consistent approval stamp.”

Some contracts were also found to be missing background exhibits, stamps and approval dates, Danzig said.

Lack of SPLOST oversight

In terms of SPLOST funds, Danzig said monies were not handled properly. He pointed to one case involving a former grocery store in Lake City where sales tax funds were improperly used to purchase the facility, but later had to be repaid from the county’s general fund.

The store was originally purchased to become a library paid for with bond financing, the attorney said. However, SPLOST funds were used instead when the bond financing was canceled right before the closing date and it was then intended to become a recreation center, he said. It ultimately became a movie sound stage, which was not an approved SPLOST project.

“We found a lack of sufficient oversight and planning for SPLOST expenditures,” Danzig said.

Confusion about fire fund finances

Danzig said there was confusion at one point over how much money was in the county’s Fire Fund. He explained that fire department officials believed they were owed an additional $2.4 million in taxes from the fund and were surprised when they found out they would have to make budget cuts that could have included termination of employees.

Other county departments had similar issues, Danzig said.

“The fire department’s interaction with the finance department seemed to be indicative at the time of the finance department’s interactions with other departments,” he said. “The finance department controlled the flow of information and did not provide wholesome information to (department heads) and commissioners needed by those departments to manage their departments.”

Lack of cooperation and equipment wiped clean

Danzig said Jackson, who abruptly quit last spring, and former County Manager Wade Starr, who was fired by commissioners 13 months ago, refused to meet with auditors.

“That was unfortunate because their actions and their decisions were at the center of the issues that were raised to us and that we were attempting to review,” Danzig said. “There remain questions about those actions and issues and perhaps they could have explained them if they had chosen to speak with us.”

He also said an unnamed former auditor for the county refused to respond to multiple requests and calls for information.

Furthermore, Danzig said unnamed former employees restored electronic devices to original factory settings before turning them in to information technology officials when they left the county’s employment. Data those employees had kept on those devices could not therefore be analyzed, he explained.

“We don’t know whether information was withheld from us,” Danzig said.

Signs of improvements and recommendations

Last year, county commissioners created a chief financial officer position and hired former Clayton County Public Schools budgets and grants director Ramona Thurman to fill that role.

Danzig said the auditors found improvements in transparency and communication between the finance department and other departments were being made under Thurman’s leadership. He said the auditors have several recommendations for improvement, but he added the department had already begun to make some of those improvements on its own.

Some of the recommendations include the creation of new fiscal policies and procedures, particularly in regards to accounts payable, improving the flow of information to other department heads and commissioners, upgrading “antiquated” financial management software and updates to county purchasing codes to address emergency purchasing powers.

Other recommendations include a centralized method of managing contracts, the development of a tracking system for SPLOST projects and a formalized approval process that would control the use of SPLOST funds. The creation of a “robust internal control system” was also recommended.

“We believe these recommendations, if adopted, will instill greater confidence in the citizenry of Clayton County that county leaders and management are responsible stewards of county funds,” Danzig said.

Turner alarmed by findings

After Danzig finished his presentation, commissioners were allowed to ask him questions. The only query came from Commissioner Gail Hambrick, who asked how much the forensic audit cost. Danzig said it cost $500,000.

But Turner later had plenty to say about the information included in the presentation. He explained the audit was necessary because when he and Rooks took office, the finance department had already been the subject of an investigation by the district attorney’s office and there had been “talk about financial issues way before we took office.”

Despite that talk, however, Turner said he was alarmed by the allegations of a lack of control, officials being left in the dark about finances and SPLOST issues.

“This forensic, according to the information that was presented to us, clearly demonstrated that there was lack of controls within the department, that there was a lack of transparency, antiquated systems and other issues,” Turner said.