Murphy – For at least the last two years, state auditors have been reprimanding counties throughout North Carolina for providing staff within the clerk’s office with improper system access, which officials say increases the risk of undetected errors and fraud.
Cherokee County is one of at least nine counties recently accused of allowing staff in the clerk of court’s office to have improper access to multiple systems. Auditors reprimanded the Clerk of Superior Court in Madison County for this finding in August.
In 2019, auditors found the error in several counties including Alamance, Cherokee, Lincoln, Nash and Yancey. Prior to that, Clay and Haywood counties were each reprimanded for the error in 2017.
Cherokee County’s 2019 audit report says 33 percent of employees in the clerk’s office had inappropriate access to the Financial Management System and the Criminal Court Information System. Officials say access to systems should be segregated so that one employee’s duties automatically provide a cross-check of work performed by other staff members.
“[Two of] the employees could have potentially misappropriated funds by collecting cash from a criminal payment, bypassing receipt entry into FMS and updating CCIS to indicate all costs have been paid,” the report says. “One employee had the ability to misappropriate funds by generating unauthorized checks because there was no independent review of the daily check register. ... The employee could have potentially misappropriated funds by dispersing to unauthorized individuals without detetion.”
While no fraud was identified during the audit period of July 2018 to February 2019, state officials said an “increased risk of undetected fraud existed.” The Cherokee County Clerk of Superior Court’s office handled more than $6 million in receipts during that period.
Clerk of Court Roger Gibson told state officials that his office’s small staff size makes it difficult to properly segregate duties. Moreover, Gibson is not allowed to hire additional employees unless approved by the state. According to state law, the number of employees in the office of each clerk of superior court is determined by a workload formula established by the Administrative Officer of the Courts.
“We’re not overstaffed, and we’re not understaffed, but we’re in the midrange where we need another employee,” Gibson told the Cherokee Scout. “If I could hire one, I could eliminate this issue.”
To rectify the problem identified by auditors, Gibson promised to print and file a voluntary leave disposition report along with a user activity report on a monthly basis. He told the Scout he hadn’t printed the reports prior to the audit because there was no activity to show. In addition, the backup bookkeeper has
been required to review the check register on a regular basis.
Auditors also found that employees in the Cherokee County clerk’s office did not compel the timely filing of estate inventories in accordance with state law. Officials found this same error in Clay, Macon and Swain counties during their last respective audits.
Failure to compel the timely filing of inventories results in a delay in finalizing the estate and could result in unauthorized transactions, including the removal of assets without the knowledge of qualified heirs. Officials say the failure to file estate inventories in a timely manner could also affect the clerk’s ability to assess and collect sufficient bonds from guardians.
State law allows a clerk of court to remove the guardian from an estate if he or she does not file inventory in a timely manner. Gibson said the state requires him to move forward with removal if a guardian ignores the initial notice to file.
“I told the auditors, ‘I live in this county. I go to the same grocery store and church they go to. I’ve got to be a little bit more considerate,’” Gibson said.
According to the audit, Gibson told state officials that employees made phone calls in lieu of written requests for asset inventories in an effort to maintain a positive working relationship with the estate’s personal representative. However, there was no documented evidence of such phone discussions.
To rectify the issue, Gibson told auditors he would maintain a log of all action taken to compel timely estate inventory filings.
“I go a step further, and it got me in trouble,” Gibson said. “Which would you rather me do? Would you rather me call you, send you a letter, or would you rather me just remove you? I guess sometimes you get in trouble for trying to help.”
State auditors also determined that the Cherokee County clerk’s office “did not attempt to notify” owners of unclaimed funds in accordance with state law. Officials found the clerk’s office “did not make a good faith effort to notify” the owners of funds totaling $4,850 before transferring the money to the state treasurer.
Gibson said the audit finding is misleading because his office sent out an initial letter but did not mail a second notice 100 percent of the time.
“We did send the first letter [regarding unclaimed funds],” he said. “[The audit] should have said the clerk’s office didn’t make the second attempt in all cases.”
Gibson told state officials that employees misunderstood the escheat process and promised to have the bookkeeper send at least two notices to all owners of unclaimed funds.
“We were instructed by the AOC that if it was less than $50, to just send it to Raleigh,” Gibson told the Scout. “If it was more than that, we had to take a second step and send them another letter.”
Gibson believes that on paper, the audit makes it appear that his office is doing something wrong; however, he views things in a different light.
“The way I look at it, I’ve done a pretty good job if this is all they can find.” he said.
Audit identifies fraud potential in clerk’s office
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