ST A T E O F L O U ISIA N A L E G ISL A T IV E A U D IT O R

Size: px

Start display at page:

Download "ST A T E O F L O U ISIA N A L E G ISL A T IV E A U D IT O R"

Branden Boone
5 years ago
Views:

1 ST A T E O F L O U ISIA N A L E G ISL A T IV E A U D IT O R Tow n of H aughton H aughton,louisiana Septem ber 18,2002 Investigative A udit D anielg.k yle,p h.d.,c PA,C FE L egislative A uditor

2 LEG ISLA TIVE A UD IT A D V ISO R Y C O UN CIL M EM BER S Senator J."Tom " Sehedler,C hairm an R epresentative Edw in Ft.M urray,v ice C hairm an Senator R obertj.b arham Senator Foster L.C am pbell,jr. Senator Lynn B.D ean Senator W illie L.M ount R epresentative R ick Farrar R epresentative V ictor T.Stelly R epresentative T.T aylor Tow nsend R epresentative W arren J.T riehe,jr. D anielg.k yle,ph.d.,c PA,C FE D arylg.purpera,c PA,C FE Underthe provisions ofstate law,this reportis a public docum ent. A copy ofthis report has been subm ited to the G overnor,to the Attorney G eneral,and to other public oficials as required by state law. A copy ofthis report has been m ade available forpublic inspection atthe Baton Rouge ofice ofthe Legislative Auditor and atthe ofice ofthe parish clerk ofcourt. This docum entis produced by the Legislative Auditor,State oflouisiana,post O fice Box 94397, Baton Rouge, Louisiana in accordance with Louisiana Revised Statute 24:513. Sixty copies ofthis public docum entwere produced atan approximate costof$ This m aterialwas produced in accordance with the standards forstate agencies established pursuantto R.S. 43:31. This report is available on the Legislative Auditor's W eb site at w ww.la.state.la.us. In com pliance w ith the Am ericans W ith Disabilities Act, if you need special assistance relative to this docum ent,orany docum ents ofthe Legislative Auditor, please contactw ayne "Skip"Irw in,directorofadm inistration,at

3 T ow n of H aughton Septem ber 18,2002 Investigative A udit O fi ce of the L egislative A uditor State of L ouisiana D anielg.k yle,ph.d.,c PA,C FE L egislative A uditor

4 DANIEL O.KYLE,PH.D,CFA,CFE LEGISLATIVE AUDITOR. OFFICE OF LEG ISLA TIV E A U D ITO R STATE O F LO U ISIAN A BATON ROUGE,I~)UISIAN A Septem ber18, NORTH THIRD STREET POST OFFICE BOX TELEPHONE:(225) FACSIMILE: (225) TH E H O N O RA BLE BILLY M A X EY,M AY O R, A N D M EM BER S O F TH E BO A R D O F A LD ER M EN H aughton,louisiana Transm itted herew ith isourinvestigative reportof the Tow n of H aughton.o urexam ination w as conducted in aeeordance w ith Title 24 of the l_ouisiana Revised Statutesand w asperform ed to determ ine the propriety of certain allegationsreceived by thisoffice. Thisreport presentsourfinding and recom m endations,as w ellasyourresponse.copiesof this reporthave been delivered to the H onorable Jam esm.b ullers,d istricta tto rney forthe Tw enty- Sixth JudicialD istrictof Louisiana;the H onorable D onald W.W ashington,u nited States A torney forthe W estern D istrictof Lo uisiana;and oth erauthoritiesasrequired by sta te law. G KG :SLC :D GP:dl Legislative A uditor

5 Page Executive Sum m ary Baekground and M ethodology Finding. Recom m endations M anagem ent'sresponse ~ A ttachm enti

6 Investigative A udit R eport T ow n of H aughton Finding (Seepage 5.) M s.tonya Taylorused Tow n fundstotaling atleast$32,381 forherpersonaluse. The Tow n's totallossis $58,365. From M arch 2001through M ay 2002,Tow n of H aughto n (Town)revenuestotaling $58,365were notdeposited into the Town 'sbank aecount.of the $58,365,M s.tonya Taylor, form ertow n em ployee,used atleast$32,381forher personaluse. M s.taylorobta ined these fundsfrom cash coueetionsof traffic finesand custom erpaym entsforutility services. M s.taylorsta ted thatshe rem oved entire traffic fine deposits from the Town and disearded any checksor m oney orders thatw ere included.a sa result,checksand m oney orderspayable to the Town totaling $10,706 were neverdeposited.an additional$15,278 in collectionswas recorded to custom eraccounts butw asnotdeposited. Recom m endations(seepage 9.) The Tow n should im plem ent policies and procedures to ensure cash received is deposited into the Town's bank accounts. W e recom m end thatthe Town im plem entpoliciesand pro ceduresto ensure propercontrols overcash received and deposited by Town em ployees.w e also reeom m end thatan appropriate levelof separation of dutiesbe m aintained am ong Tow n em ployees.the dutiesof receiving cash, recording cash receipts,and depositing cash should be separated.a lso,allrecordsof cash receiptsand deposits prepared by em ployeesshould be reconciled to the Tow n's bank stateraents. Finally,w e recom m end thatthe D istrict A torney forthe Tw enty-sixth JudicialD istrictof Louisiana and the U nited Sta tesa ttorn ey forthe W estern D istrictof Louisian a re view thisinform ation and ta ke appropriate legal aetion,to include seeking restitution. M anagem ent'sresponse(see AttacbmentL) M anagementimplemented majorproceduresto ensureproper controlsoverallm onetary transactionsforthe Tow n.n ew checksand balancesw ere im plem ented and are stillin place.

8 The Town of Haughton (Town)wasincorporated on April29,1920,undertheprovisionsof the Law rason A ct.the Town operatesunderthe M ayor-board of A lderm en form of governm ent. D uring the auditof the Tow n's 2001financialstatem ents,sm ith,pugh & Co.,LLC,noted tw o itemsofconcern :(1)deposits prepared by thepolice departm entthatwere notdeposited atthe bank and (2)a m aterialdiscrepancy found during the testing of the accounts receivable and collections of w ate r,sew er,and sanitation funds. Sm ith,pugh & Co.reported thism aterto Town officials an d to th e Legislative A uditor. M ayorbilly M axey and other Town em ployees provided fullcooperation w ith the Legislative A uditorduring thisinvestigative audit. The proce duresperform ed during thisinvestigative auditconsisted of (1)interviewing employeesan d ofi eialsof thetown ;(2)interviewing otherpersonsasappropriate; (3)examining selected documentsand recordsof thetown ;(4)making inquiriesand performing teststo the extentweconsidered nece ssary to achieve ourpurpose;and (5)reviewing applicable sta te law s. The resultof ourinvestigative auditis the finding and recom m endationsherein

9 Town of Haughton

10 From M arch 2001through M ay 2002,Town of Haughton (Town)revenuestotaling $58,365 w ere notdeposited into the Tow n's bank account. O f the $58,365,M s.tonya Taylor, form er Tow n em ployee,used atleast$32,381for her personaluse.m s.taylor obtained these fundsfrom cash collectionsof trafi c fre esand custom er paym ents for utility services. M s.taylor stated thatshe rem oved entire traffic fine depositsfrom the Tow n and discarded any checks or m oney ordersthatw ere included.a s a result,checksand m oney orderspayable to the Tow n totaling $10,706 w ere never deposited.a n additional$15,278 in collectionsw asrecorded to custom er accounts butw asnotdeposited. M s.taylorbegan w orking forthe Tow n on M arch 15, M s.taylor'sdutiesincluded receiving trafi c fine deposits from the police departm entand preparing, collecting,and posting w aterbills. M s.taylorstated thatshe took eash from the Tow n and used the cash for personalpurposes. D uring the period M arch 2001 through M ay 2002,M s.taylortook cash totaling at least$32,381from the Town.Thiscash wasmade up of collectionsfrom traffic finesand custom erpaym ents forutility services. M issing C ash Trafi c Fines $21,087 U tility Paym ents 11~294 Total Trafi c Fines T rafi c Fines Em ployeesatthe police departm entcollecttrafi c fines daily and prepared deposits thatw ere given to M issing D eposits M s.taylor. M s.taylorw asresponsible forverifying the depositand recording the am ountsinto a logbook.town A ltered D eposit recordsshow thatm s.taylorreceived 31 deposits totaling $31,793 thatwere neverdeposited into the T otal Town'sbank account.these depositsw ere m ade up of $20,787 in cash an d $10,706 in checksand m oney orders. In addition,one traffic fine depositwasaltered and $300 in cash w asrem oved from the deposit. M s.tayloradm itted thatshe to ok entire depositson severaloccasions. M s.taylorstated that she used the cash forpersonalpurp osesan d threw the checksand m oney ordersin the trash. U tility Paym ents M s.taylor's dutiesinclude preparing utility bills,receiving utility paym ents,posting paym ents to custom eraccounts,and preparing the utility deposits.the Town m aintains a logbook to record daily utility deposits.m s.taylorw asresponsible for U tility Paym ents Posted butnotd eposited A ltered D eposits T otal

11 Tonga of recording the depositsinto the logbook.d uring the period M arch 2001through M ay 2002,cash totaling atleast$11,294 w as notdeposited into the Tow n'sbank account.thism issing cash w as concealed in tw o differentm anners. First,custom eracco untsw ere posted in the com puterbilling program although the cash w asneverincluded in any deposits. Second,aetualdeposits w ere lessthan the am ountactually collected and reco rded in the logbook. D uring the 2001audit,an approxim ate $21,334 discrepancy w asdisco vered between the com pute rpostingsand actualdepositsforthe utility acco unts. W e determ ined thatthis discrepancy is due to cash thatw as co llected butnotdeposited.w e w ere able to docum ent $6,056 in cash collected and posted to the custom eraccountsbutnotdeposited during 2001.W e found an additional$3,017 of cash collected and posted to the custom eraccountbutnot deposited during 2002.The rem aining $15,278 discrepancy forthe year 2001wascaused because M s.taylorposted custom eraccountsbutdid notm ake a corresponding deposit. Because of inadequate recordsand docum entation,w e w ere unable to determ ine exactly w hat accounts ordatesw ere affected. The Town'srecordsindieate thaton 19 occasionsa totalof $2,220 in cash w ascollected and recorded in the logbook butw asnotdeposited.m s.tayloradm ited thatshe som etim esposted custom eraccounts and personally keptthe cash thatw as collected. M s.tayloralso stated that she took the cash on the occasionsthatthe logbook reflected an am ountgreaterthan the am ount actually deposited Cash totaling atleast$32,381is m issing from the Tow n. M s.taylorstated thatshe took cash from the Tow n forher personaluse. In addition to the m issing cash,m s.taylorthrew aw ay cheeks and m oney orders totaling $10,706,thereby depriving the Town of thisrevenue. W e also M issing C ash TotalLossof R evenue M issing C heeks/m oney O rders 2001 R ecorded butnotd eposited T otal $32,381 10,706 15~278 $58.36._._.55 determ ined thata discrepancy betw een the com puterpostings an d actualdepositsduring 2001totaling $15,278 wasdue to custom eraccountsbeing recorded ascollected butno cash being deposited.a sa result,the Town hassufered a totallossof $58,365.These actionsindicate a possible violation of one or m ore of the follow ing law s:

12 Finding ~ R.S.14:67,"Theft"'j ~ R.S.14:134,"M alfeasance ilo fice''2 ~ 18 U.S.C.~1341,"M ailfraud'3 Theactualdetermination asto whetherany individualissubjectto formalchargeisatthe discretion of the districtattorney. JILS.14:67 provides,in part,thattheft isthe nfisapproprlation ortaking of anything ofvalue which belongsto another,eitherwithoutthe consentofthe oth erto th e m isappropriation ortaking,orby m eansof fraudulentoonduet,practice s,orrepresentations. 2ILS.14:134 provides, in part,thatrealfeasene~in oficeiseommiterlwhen any publicofficer orpublicemployeeshall(1)intentionally refuse orfailto perform any duty lawfully required ofhim,assuchofficeroremployee;(2)intentionaly pe rform any suchduty in anunlawfulmanner; or(3)knowingly permitany otherpubbe oficerorpubl/eemployee,underhisauthority,to intentionaly refuse orfailto perform any duty law fully required of him orto perform any such duty in an unlawfulm anner. 18U.8.C.~1341provides,in part,thatmailfraud isha ving devised orintended to deviseanyschemeto defraud,orforobtaining money or property by meansof false orfraudulentpretenses,representations,orprom isesforthe purpose of executing such scheme oratempting ~,o to de, placesin any pe stofi ce orauthorized depository formailma tter,an y materorthing wha teverto be se ntordelivered by thepostalservice,or takesorre~ ived therefrom,any such materorthing,orknowingly cause sto be delivered by mailaccording to the direction thereon.

13 Town of Haughton

14 W e recommend thatthetown of Haughton (Town)implementpoliciesand proceduresto ensure propercontrolsovercash received and deposited by Town employees.w e also recommend that an appropriate levelof separation of dutiesbe m ainta ined am ong Town em ployees.the duties of receiving cash,recording cash receipts,and depositing cash should be separated.a lso,all recordsof cash receiptsand deposits prepared by em ployeesshould be reconciled to the Tow n's bank statem ents. Finally,we re co m m end thatthe D istricta ttorney forthe Tw enty-sixth Judicial D istrictof Louisiana and the U nited StatesA tto rney forthe W estern D istrictof Louisiana review thisinform ation and lake appropriate legalaction,to include seeking restitution.

15 10 Town of Haugh~on

16 A ttachm ent I M anagem ent's R esponse

17 T O W N O F H A U G H TO N 118 W,M ck IN LEY P.O.BO X 729 M A YO R ~ BILLY J.M AXEY HAUGHTON.LOUISIANA 71o37r~v72~9~ (3]8)949.94Ol L-i -3 ~,',~~ :93 A ugust29,2002 D anielg.k yle,ph.d,c.p.a.,c.f.e N orth Third Street P.O.Box Baton Rouge,LA D ear D r.kyle, I received the draft of your Investigative A udit Report on the Tow n of H aughton,in H aughton,louisiana,on A ugust28,2002. Your staf did an excellentjob in m aking thisreportand examining the recordsofthetown finding the discrepancies in the tow n accounts. M r. Scott L. Carlton, Sam uel E. D e Lee, and M s. K risten G reen w ere very professional and courteous.they should be com m ended for their w ork. I w as notified on M ay 14,2002 at approxim ately 9:00 a.m.,by our tow n auditors, that there w ere apparent irregulations of certain funds during their audit. I m et that afternoon w ith the clerk involved and she w as placed on adm inistrative leave. O n M ay 15,2002,I m etw ith the ofi ce personnel and m ajor procedures w ere im plem ented to insure proper controls over allm om entary tr ansactions for the tow n. N ew checks and balances w ere im plem ented and are stillin place. M y goalis to see that contr olofallm onetary transactions are carried outaccording to accounting and auditrequirem ents,elim inating,as bestw e can,the possibility ofthis happening again. Yours tr uly, Billy J.M axey,m ayor BJM /cs

The,recommendation in this report represents,in ourjudgment,thatmostlikely to bring about

The,recommendation in this report represents,in ourjudgment,thatmostlikely to bring about LEGISLATIVE A UDITOR LO UISIA NA SYSTEM IC INITIATIVES PRO G RA M C O U NC IL STATE O F LO UISIA NA M anagem entletter,dated February 19,1997 Page 2 M anagem entattributes the noncom pliance to insta lation