Maryland Audit of Potomac River Fisheries Commission: fishy record-keeping could lead to fraud

Amusement Park Government  The Maryland Department of Legislative Audits reviews the operations of each agency funded by public tax dollars and turns up some real doozies from time to time. What many in small business or operating their own family budgets might expect is done as part and parcel of government operations may be surprised at the lax and loose handling of public money. The following are the highlights of the Potomac River Fisheries Commission audit. Others will be panned from time to time in THE CHESAPEAKE TODAY  

 

What the audit found:

Improve Overall Operational Controls

The Potomac River Fisheries Commission began a year of transition in July 2013, when its long standing Executive Secretary retired and a replacement came from outside of the organization. Although this audit covers fiscal year 2013, we noted several areas where controls are not in place or are not functioning properly to ensure safeguards over assets since the transition began. The Administrative Assistant does not secure the Commission’s debit card.

Management was informed of this lack of control during the fiscal year 2012 audit and took steps to correct this immediately; however, upon follow-up in fiscal year 2013, the Administrative Assistant is again keeping the debit card in an unsecured location.

The Executive Secretary did not document his review of the last payroll in fiscal year 2013 and has not documented any payroll review during fiscal year 2014. Management review of payroll transactions is crucial to ensure that only current employees receive the correct pay.

Commission staff and the new Executive Secretary  did  not  prepare  or  review  the June 30, 2013, operating account reconciliation until October 15, 2013, and did not review or reconcile other bank accounts until April 14, 2014, which resulted in the recording of bank service charges and interest revenues in the wrong period. Timely reconciliation of all bank accounts is necessary to ensure that unauthorized expenditures do not occur and that deposits are properly recorded.

In addition, lack of reconciliation coupled with no controls over the debit card could result in fraudulent charges that personnel would not catch within a timeframe that would allow recoupment from the bank – normally required within 60 days.

Further, delay in preparation of reconciliations together with absence of a review of payroll transactions could result in incorrect pay amounts and fraudulent payments to ghost employees. The Commission should ensure that controls are in place to properly safeguard Commission assets.

This includes proper security surrounding the debit card; systematic documented review of all payroll transactions by the Executive Secretary and/or Assistant Executive Secretary; and timely reconciliation of all bank accounts.

About the Potomac River Fisheries Commission:

The Potomac River Fisheries Commission is a bi-state commission established to conserve and improve the fishery resources of the tidewater portion of the Potomac River. The Commission’s leadership consists of eight Commissioners, four representing Maryland and four representing Virginia. During the current and previous fiscal years, the Commission received revenues from the following sources.

Potomac River Fisheries Commission funding sources. Office of Legislative Audits graphic.

Potomac River Fisheries Commission funding sources. Office of Legislative Audits graphic.

Potomac River Fisheries Commission spending for 2013 and 2013

Potomac River Fisheries Commission spending for 2013 and 2013

The following response from the PRFC was made to the Auditor of Public Accounts of Virginia and was included in the report issued from the Maryland Office of Legislative Audits:

response to PRFC audit

SUMMARY:

There was no breakdown in what the prior “longtime” Executive Secretary of the PRFC was paid or the new salary level of the newly hired Martin L. Gary; and the report didn’t explicitly lay the blame for the loose accounting practices on the former Executive Secretary. The audit response also didn’t detail why the newly hired Executive Secretary didn’t have the skills to use QuickBooks or provide any reason why proper accounting and reconciliation procedures were not being followed.  This revelation about the loose and fishy record-keeping continues to add credence to the old saying “close enough for Government work”.

See full Audit report here:

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