April 17, 2007

WEITZMAN MOVES TO COMPEL CLERK TO USE COUNTY FINANCIAL SYSTEM

Requests Confirmation From NYS Attorney General Cuomo

Seeking to remedy serious weaknesses in the way the Nassau County Clerk’s Office accounts for more than $300 million in taxes and fees that flow through the office annually, Nassau County Comptroller Howard S. Weitzman today said he has asked for an opinion from New York State Attorney General Andrew Cuomo confirming the County Comptroller’s authority to direct the Clerk’s Office to make use of the county’s financial system. Comptroller Weitzman disclosed his request to the Attorney General in testimony today during a Nassau County legislative hearing on the situation in the Clerk’s Office.

The problems were made public in an audit last month by the Nassau Comptroller’s Office that found an utter absence of financial controls, oversight, and accounting for hundreds of millions in tax revenues. The Clerk’s Office collects more tax revenues than any other county department, apart from sales and property taxes. Comptroller Weitzman directed the Clerk to record all financial transactions on the county’s accounting system. The Clerk has not responded to the Comptroller’s directive. “As we revealed in our audit, the Nassau County Clerk’s Office takes in huge amounts of tax dollars every year but has essentially no accounting system and no financial controls,” Comptroller Weitzman said. “As a result, these taxpayer monies are vulnerable to the possibility of embezzlement or fraud.

“In order to correct this situation, I have directed that the County Clerk’s Office immediately begin recording all of its financial transactions in the Nassau Integrated Financial System (NIFS). I have also offered to make my accounting staff available to help effect this change, which would involve no actual joining of accounts, but simply the recording of financial data in a bona fide county accounting system.

“Although the Nassau County Charter clearly gives me the authority to oversee the manner in which all county offices maintain their accounts, I have written to New York Attorney General Andrew Cuomo to confirm my authority.”

The March 20 Comptroller’s audit found that the Clerk’s Office assigns a single deputy county clerk the responsibility for almost all financial transactions, including most revenues, expenditures, banking transactions and investments, which are then recorded in dozens of primitive spreadsheets that do not constitute a double-entry general ledger system, a standard in accounting. Weitzman’s letter to Attorney General Cuomo (attached) notes that,

• The Clerk’s Office relies almost exclusively on a single bank, State Bank of Long Island, to handle tens of millions of dollars in deposits for the Clerk’s Office, without soliciting competitive quotes for interest rates from other banks.



• Cashiers in the Clerk’s Office have the ability to waive or change fees and taxes without supervisor approval, and are not prevented from doing so by the office’s computerized transaction recording system. In a test period of three days in December 2005, a total of $398,243 was reported as waived or reduced charges.



• The Office’s transaction recording system (BROWNtech) was obtained from a small firm run out of the owner’s home in Massachusetts, and is not serviced by the county’s Information Technology department.



• The figures reported in the Clerk’s annual report to the Legislature are internally inconsistent and cannot be reconciled to the spreadsheets prepared by the Clerk’s Office. Auditors found unexplained inconsistencies totaling at least $366,000 in the 2005 report.

In addition to directing the Clerk’s Office to begin recording its transactions in the county’s accounting system, Comptroller Weitzman also wrote to State Comptroller Thomas DiNapoli asking that he conduct a comprehensive review of the Nassau Clerk’s Office, to determine whether taxpayer funds paid to the Clerk are recorded and distributed appropriately to the state and local governments; and that he consider a similar review of all County Clerks’ offices statewide to see if similar conditions may exist.

The vast majority of the revenues collected by the Clerk are paid out to New York State and local governments. In 2005, the Clerk reported $315.8 million in revenues, approximately 95 percent of which were disbursed to the state, state authorities, and local governments other than Nassau County, as required by law. The Clerk reported paying Nassau County $15.9 million for the year. Mortgage tax revenues, representing approximately 73 percent of monies collected in 2005, were the main focus of the audit.

Letter from Comptroller Weitzman to Attorney General Andrew Cuomo (~ 69 kb .pdf file - 2 pages)