State audits county agency

By Mike Sever Record-Courier staff writer Published:

The special audit is partly at the request of county Auditor Janet Esposito, said William D. Lynch, a deputy auditor in the Department of Audit of the Ohio Office of the Auditor. The state's audit of the 1996 county budget also turned up the account. Once the fund came to light, commissioners hired James G. Zupka to do conduct and outside audit.

Esposito said she wanted to look at the fund herself but commissioners refused her request for receipts.

Commissioner Chuck Keiper said he did not recall the auditor making that request. "Maybe by then Mr. Zupka had the receipts for our audit, I don't know."

Esposito said the fund was never set up nor closed legally by commissioners' resolution, and cash receipts were not deposited on a daily basis.

While unable to conduct her own audit, Esposito said she did determine that in the first half of 1997 receipts of about $3,000 from one scrap buyer in Akron were not deposited with the county.

"Also, checks were issued (by scrap buyers) to employees" instead of being made out to the county or the waste district, or buyers paid in cash, she said.

Commissioner Chuck Keiper said their audit found several instances where checks were written to employees rather than the county.

"Apparently employees stopped and cashed the checks on the way back (to the recycling plant) and turned in the cash," he said.

According to that audit, over the fund's 21-month life it was used to purchase $1,606 in food, including holiday hams and lunches, for employees. Another $517 in expenditures were not covered by receipts.

Other disallowed uses included $506 for what the audit termed "inappropriate purposes" such as aquarium and pet supplies, flower expenses and gift certificates. Employees also borrowed from the fund, leaving IOU's in the fund log.

The audit also showed employees paid $39 in unnecessary sales tax on allowable purchases. The district is tax-exempt. During its operation, the fund received $7,474 and disbursed $6,910.

In August, District Coordinator Charles Ramer reimbursed $2,668 to the district for the hams and for other disallowed expenditures. County commissioners retroactively approved $4,241 of allowable expenditures.

Commissioner Chuck Keiper said the fund was promptly shut down at the end of June, the same week it was brought to commissioners' notice in a management letter from the state auditor's office.

"That was the first time we became aware there was this petty cash account," Keiper said. "They'd spent a good amount of time interviewing our people and they were pretty sure there weren't any problems."

Lynch noted the audit would include a second cash fund used for freon recovery from refrigerators. Commissioners said they were unaware there was a second cash fund at the recycling district. The district charges $5 per appliance and then pays that money to the firm which reclaims the freon from appliances. Apparently much of that money is in cash and is not deposited with the county until it is paid to the freon recovery firm.

Keiper is president of the county board of commissioners and also heads the solid waste district commission. He minimized the impact of the fund's use and said that some of the procedure, while improper in government, would be allowed in private industry. The fund was set up by recycling plant manager Fred White with the approval of Ramer.

"What we have is a failure to follow particular government procedures, and not a plot to defraud the government," Keiper said.

A special audit goes beyond usual audit procedures of looking at existing records, and tries to determine what revenues should have been recorded.

"We're not accusing anybody of anything," Lynch told county commissioners Thursday morning. Lynch said employees and individuals or vendors who sold or bought scrap from the waste district would be interviewed to help determine what revenues flowed through the fund.

"There's a lot of money going through out there. Very little of it is in question," Lynch said of the waste district.

Keiper said commissioners are taking the issue seriously.

"I think it's a significant problem," he said. "What we learned from this is we need to routinely provide our managers annual training on what's expected of them in government accounting." Lynch said the special audit should be done by November. Cost was estimated at $5,000.

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