June 12, 2007

NASSAU COUNTY  COMPTROLLER WEITZMAN TIGHTENS CONTROLS OVER CONTRACT SOCIAL SERVICE AGENCIES

Social service agencies, and other not-for-profit organizations that receive millions of dollars in county contracts, will soon have to meet more stringent financial and reporting requirements, Nassau County Comptroller Howard Weitzman said today.

The new requirements are intended, in part, to prevent a repeat of an incident uncovered during a Comptroller’s audit last year of a Nassau County community group that resulted in fraud and grand larceny charges being filed against two agency employees.

Comptroller Weitzman announced the new requirements in a speech today to representatives of social service agencies that do business with Nassau County, as part of a seminar hosted by the county’s Department of Health & Human Services at Nassau Community College.

“Nassau is fortunate to have dozens of social service agencies that provide important  services for children, seniors, and those challenged by physical and mental health problems,” Comptroller Weitzman said.  “The county provides many millions of taxpayer dollars to these agencies.  The new requirements are intended to enhance the county’s oversight of these groups and to help ensure that, before the county provides such funding to a social service agency or other not-for-profit organization, the agency first provides assurances that its own fiscal house is in order.”

Deputy County Executive Mary Curtis, who oversees the county's social services agencies, said, “We will continue to work on developing initiatives that lead to more transparency in government-related operations and reduce the chances for fraud and abuse of taxpayer funds.”

Among the new reporting requirements, agencies will now be required to attest:

• whether they have an external accounting/auditing firm that performs a yearly audit of financial statements;

• whether auditors or regulatory authorities have found deficiencies in internal controls, violations of contract or grant agreements;
  
• whether they know about any potential frauds or embezzlement in their organizations, and whether they have reported such potentially illegal acts to law enforcement authorities and/or an insurance company;
  
• whether they have written policies and procedures for cash management, investing, budgeting, capital planning, payroll, purchasing and billing;
  
• whether they monitor compliance with their own policies and procedures;
  
• whether they have adopted a code of ethics and a conflict of interest policy; and whether any known violations of the policy have occurred in the last three years;
  
• whether the agency’s Board members receive health benefits.

The incident uncovered last year involved the Five Towns Community Center, a private, non-profit agency in Lawrence that receives county funds to run youth, senior, and drug counseling programs.  A September 2006 Comptroller’s Office audit determined that the organization’s bookkeeper had embezzled funds, that the theft was known to agency officials, but that the matter had not been reported to authorities.  Following the audit, a total of more than $50,000 was ultimately found to have been stolen in a check-cashing scheme involving several accomplices.  The audit had also uncovered other financial lapses at Five Towns, including inadequate internal controls, inaccurate employee timesheets, and an outstanding debt to the county of more than $100,000.

“In major embezzlement cases such as occurred in the Roslyn School District, and in smaller ones such as the theft at the Five Towns Community Center, the problems were magnified by the fact that the fraud was initially swept under the rug by administrators,” Comptroller Weitzman said.  “Any organization that receives public support needs to ensure that it has proper procedures for preventing and detecting fraud, and clear policies for reporting fraud, once detected, to the appropriate authorities.