12-06-07

Two employees of the North Shore Child and Family Guidance Center “NSCFGC” were able to steal nearly $71,000 from the agency through various schemes that included cashing the checks of phantom employees, according to a report by Nassau County Comptroller Howard Weitzman. The agency also failed to conduct background checks on many of their employees who work with children.

“These employees were working in an environment of no oversight, no review by management and sloppy bookkeeping,” said Weitzman. “It was the perfect storm for fraud. Equally disturbing is the fact that one of the crimes was never reported to the appropriate authorities.”

The NSCFGC is a not-for-profit children’s mental health agency that services children, youth and family, regardless of income. The audit period covered January 2003 through June 2005 and was carried out through October 2007.

The Comptroller’s report found that background checks were not conducted for all employees working with children; the county was erroneously charged for expenses relating to non-county programs; and after the thefts administrators still did not put proper controls in place.

“Putting children at risk with improper screening of employees, along with the lack of financial controls uncovered at the center, speaks volumes about the dire need for new rules and procedures,” said Comptroller Weitzman. “My office, working with the administration, will now be requesting all social service agencies contracting with the county disclose the existence of their written rules and policies and take responsibility for what goes on under their roof.”

The Comptroller’s newly-instituted procedures include an eight-page questionnaire that puts more stringent reporting requirements in place for all social service agencies to assist in the prevention and detection of fraud, with clearer policies for reporting fraud to the proper authorities. In addition, the questionnaire must be “signed off” by top administrators. Currently the questionnaire is voluntary, however in 2009 it will become mandatory.

“I believe these new financial control measures, with the cooperation of the not-for-profit community, will compel these agencies to act as good stewards of public funds,” Comptroller Weitzman said. “These controls will go a long way in bringing improprieties and other misuse of taxpayer funds to light.”

Auditors found that several employees working with children did not receive proper background checks. The center was advised to immediately submit applications to the New York State Central Register of Child Abuse and Maltreatment for clearance of the employees and was instructed to provide supervision of the employees until the check was completed.

Auditors found that during a five-month period from September 2003 to January 2004 the NSCFGC was the target of several frauds committed by employees amounting to $70,825.

The frauds involved payroll and operating disbursements. The employees were able to steal thousands of dollars by making changes to the payroll and reinstating terminated employees’ names, changing their names, forging their signatures and cashing the checks. In addition, checks that should have been properly voided were used to pay fictitious vendors. The employees were arrested and their employment at the center was terminated after these incidents.

Another finding uncovered approximately $12,000 of deposits that were reported on the center’s books but never made it to the bank. The missing deposits occurred during the same time period as the frauds but were never investigated or recovered, and were ultimately written off. The audit also found internal controls over employee time and leave usage were inadequate and NSCFGC did not enforce its own policy. Some employees used more leave than they had accrued, resulting in an over billing of $9,215 to the county for unearned vacation and personal leave for 2003 and 2004. Auditors also found that costs associated with non-union employee’s contributions to health benefits were inappropriately charged to county contracts. This resulted in the county being overcharged more than $5,000.

According to the Comptroller the failure to report theft and fraud incidents at NSCFG was similar to what occurred at both the Five Towns Community Center and the Roslyn School District. The questionnaire will clearly inform the agencies of their obligation to report any improprieties to the proper authorities.

“The findings of both audits were the result of no written policies or adequate oversight of accounting and payroll procedures,” said Weitzman. “While these agencies may be good at delivering services to those in need, they need to better protect taxpayer dollars and understand their obligation with respect to reporting illegal acts.”

The Comptroller’s office worked together with the administration and the Health and Welfare Council of Long Island to develop the questionnaire. The Comptroller’s Office will assist any agencies with the new questionnaires to make sure that they are as accurate and complete as possible.

“I support the Comptroller’s initiative and support any offer to help these agencies become more efficient and transparent,” said Gwen O’Shea, President and CEO of the Health and Welfare Council of Long Island.

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

The full text of the report and the questionnaire may be read or downloaded by clicking on the links below:

Weitzman Audit Finds Room For Improvement Of North Shore
Child & Family Guidance Center’s Fiscal Oversight And Controls

Employees Working with Children Never Received Background Checks

Weitzman Audit Finds Room For Improvement Of North Shore Child & Family Guidance Center’s Fiscal Oversight And Controls

Employees Working with Children Never Received Background Checks

Weitzman Audit Finds Room For Improvement Of North Shore
Child & Family Guidance Center’s Fiscal Oversight And Controls