An outside certified public accounting firm's report on the internal controls of Madera County's office of treasurer-tax collector Tracy Kennedy, highlights 18 findings and recommendations the department should implement.
The firm, Hemming Morse, of Fresno, performed the evaluation at the request of the Madera County Board of Supervisors who wanted an objective, neutral third party evaluation of the department. The $50,000 report was ordered in early February after issues were brought to the attention of Eric Fleming, county chief administrative officer by Marcia Hall, county auditor-controller, over concerns she had with the department.
The report separated the observations and recommendations into three levels: level 1 requiring "immediate" attention - level 2 requiring "prompt" attention level 3 requiring "consideration and appropriate attention."
The report contained nine level 1, five level 2 and four level 3 recommendations.
Level one observations included cash not reconciled to the general ledger on a daily basis; lack of segregation of some department duties; writing and signing a check to essentially move funds from one general ledger account to another without notifying the county auditor; no mechanism in place to track additions and/or deletions to the business license renewal database; and an inadequate quarterly review of interest income to the general ledger per the department's tracking software.
Each observation came with recommendations to correct or improve the reported issues, and a response from Kennedy.
Kennedy said some internal control suggestions were made in the report which will be beneficial to her department however some will be challenging to implement due to current permanent staffing levels.
"We will certainly be implementing them (recommendations) to the best of our ability and available resources," Kennedy said.
One of the concerns brought up by Hall and Fleming back in February was the amount of cash on-hand in the office vault ($35,000 to $40,000) well exceeded the amount of other comparable agencies which usually had less than $5,000 on-hand .
While the report did not specifically address the amount of cash kept in the vault, it did point out that on several occasions the inside door of the vault was left open and unattended, which could lead to unauthorized access to cash in the vault.
According to the report, Kennedy does not know when this occurred, but has directed her staff to make certain the door is locked at all times.
Concern was also voiced over a video camera located near the vault, was covered in paper, until recently, blocking the feed to the county's security system, rendering it useless as a security device.
The report recommended that the camera should be monitored by an individual or department not associated with the tax collector office.
Kennedy feels much was made about the cameras being covered and explained that the camera was covered in 2007 upon moving into the new government center, not as an attempt to hide anything as suggested.
"It was covered because it was never monitored, it was unknown who had a video feed, it had limited features and the maintenance agreement was not kept current for unknown reasons," Kennedy said. "Therefore it (camera) had little, if any value. It has never accomplished its intended purpose since installation. The camera was uncovered in Feb 2013, prior to the hiring of Hemming Morse and is currently uncovered and will remain uncovered."
"The Department cooperated fully and completely with the Hemming Morse review as we do with all of our external audits," Kennedy said. "We are audited at least twice annually, by the external firms doing our county wide audit, and an annual compliance audit of the Treasury Investment pool."
Previous to the ordering of the report, there were reported clashes between Hall and Kennedy. Supervisor David Rogers said in February everyone wanted to allow Hall and Kennedy the chance to work on the issues, but personal clashes between the two officials interfered with that happening.
Kennedy said, her working relationship with Fleming and Hall remains professional and will continue in that vein.
"Now that the report has been completed, I look forward to continuing to serve the people of this great county as I have done for years with transparency and integrity and focus on innovations and improvements to better serve the taxpayers of Madera County," Kennedy said.
Fleming said the report supported most of the initial observations brought to him by Hall.
"The report was helpful in that it provided an independent and objective expert review of the situation which in the end confirmed issues that had been identified by the county's auditor-controller in June 2012," Fleming said. "It also offers up solutions that I'm hopeful will be implemented by the treasurer-tax collector. These are significant issues that I'm hopeful will now be addressed. To make sure the changes are implemented, the board has asked Hemming Morse to do a follow-up review every two months until completed."
Fleming said that moving forward, he, Hall and Kennedy "will get along just fine if everyone stays focused on doing what's best for the county organization and the public we all serve."
"The findings from the report highlight some of the issues within the treasure-tax collector's office," said Max Rodriguez, chairman of the board of supervisors. "Now the challenge is to fix these problems and move forward."
Download/View PDF of: Hemming Morse report on Madera County Office of Treasurer/Tax Collector