Audit finds more issues with Clerk’s office

Audit of last 14 months of Clerk of Court’s tenure notes repeat findings of previous audit

By Allen Worrell -

Carolyn Honeycutt

For the second year in a row, a state audit of the Clerk of the Circuit Court of Carroll County shows a wide number of matters of internal control and its operation that has led, or could lead, to the loss of revenues, assets or otherwise compromise the Clerk’s fiscal accountability.

Last year in an audit for the two-year period from Jan. 1, 2012 to Dec. 31, 2013, the report by Auditor of Public Accounts Martha S. Mavredes claimed that then-Carroll County Circuit Court Clerk Carolyn H. Honeycutt “does not have adequate internal controls over liabilities and trust funds.”

In total, that audit found more than a quarter of a million dollars ($253,865) of funds that were either incorrectly classified, disbursed to accounts that were not eligible, or miscoded, in addition to 18 cases in which defendants were not billed, state and local fines were incorrectly coded, and court costs were erroneously assessed to defendants.

Honeycutt retired as Clerk of the Circuit Court of Carroll County in February. Since that time, Mavredes has completed a new audit of cash receipts and disbursements of Honeycutt from Jan. 1, 2014 to Feb. 28, 2015, the date of Honeycutt’s retirement.

“Our primary objectives were to test the accuracy of financial transactions recorded on the Court’s financial management system; evaluate the Court’s internal controls; and test its compliance with significant state laws, regulations, and policies,” Mavredes wrote in an audit letter to Janice Jessup, interim clerk, and Phil McCraw, Chairman of the Carroll County Board of Supervisors.

Audit’s Findings

In the new audit from Jan. 1, 2014 to Feb. 28, 2015, Mavredes notes three repeat findings in Honeycutt’s office – the need to improve management over liabilities and trust funds, the need to properly bill and collect court fines and costs, and the need to reconcile bank accounting. A new finding noted a need for the office to retain subscriber agreements.

In the first repeat finding, the audit notes “the former clerk did not have adequate internal controls over trust funds and other liabilities.” Specifically, the auditor noted the following conditions:

– As of February 2015, the former Clerk was holding $3,623 in liabilities and $58 in unidentified funds that should have been escheated or otherwise disbursed

– Delayed recording of two trust fund disbursements in the automated accounting system, for up to eight weeks after disbursing the funds to beneficiaries

– Delayed recording of five trust funds as such in the automated accounting system for up to 15 weeks after receipting the funds. The monies were initially recorded in an account other than the trust fund account in the Clerk’s accounting system, thus understating trust funds on the court’s general ledger and creating the risk that the funds would not be invested timely.

“The Interim Clerk should work with her staff and review the status of all liability accounts,” the audit noted. “The Interim Clerk should remit all eligible unclaimed property and restitution to the respective agencies and ensure that all trust fund activity has been recorded in the accounting system.”

The audit also noted that the former clerk and her staff did not properly bill and collect court fines and costs, a repeat finding. In 12 of 28 cases tested, the former clerk made the following errors, according to the audit:

– In three cases, fines of $775 were miscoded as local instead of state, resulting in a loss of revenue to the Commonwealth.

– In one local case, the $300 fine was miscoded as state instead of local. In another local case, a $250 fine was miscoded as a county fine instead of a city fine.

– In three local cases, court appointed attorney bills totaling $492 were sent to the Commonwealth for payment instead of to the locality.

– In five cases, defendants were not billed for a total of $437 in court costs, resulting in a loss of revenue to the Commonwealth.

– In four cases, defendants were overcharged court costs of $402.

“The Interim Clerk and her staff should correct the specific cases noted above,” the audit stated. “The Clerk’s staff indicated they had not been properly trained in the assessment of criminal court fines and costs. To address this, the Interim Clerk should request training from the Office of the Executive Secretary of the Supreme Court of Virginia to ensure that fines and costs are assessed and collected in accordance with the Code of Virginia.”

As to the last repeat finding, the audit states the former clerk never reconciled the court’s bank account during the audit period.

“Timely and complete reconciliations are an essential internal control. Allowing reconciling items to go unresolved can lead to errors and irregularities going undetected and increases the risk of loss of funds,” the audit stated. “The Interim Clerk should reconcile accounting system balances to the bank statement monthly and resolve all differences immediately as required by the Financial Management System User’s Guide.

As for the new finding, the audit stated that in four of six secure remote access subscribers tested, the former Clerk did not retain the subscriber agreements.

“Section 17.1-276 of the Code of Virginia requires the Clerk to enter into an agreement with each person who the Clerk authorizes to have remote access to the Clerk’s records,” the audit stated. “Completed subscriber agreements provide written proof that subscribers accept the terms and conditions of the agreement including the responsibility to the Clerk for the payment of fees and the proper use of the website. The Interim Clerk should obtain and maintain signed agreements from all subscribers accessing the court’s records remotely.”

In the audit letter to Jessup and McCraw, Mavredes said it’s the court management’s responsibility for establishing and maintaining internal controls and complying with applicable laws and regulations. Internal control is a process designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations.

“Deficiencies in internal controls could possibly lead to the loss of revenue or assets, or otherwise compromise fiscal accountability,” Mavredes wrote. “We noted matters involving internal control and its operation necessary to bring to management’s attention.”

She concluded that the findings were shared with the Interim Clerk, who cooperated with auditors during the engagement. A response from Jessup was also including in the audit.

“Dear Ms. Mavredes,

With the limited staff that I have, I will focus on trying to get these matters corrected in a timely manner,” Jessup wrote. “I would like to say how much we appreciated the time that the auditor spent in explaining how to correct these issues.”

Allen Worrell can be reached at (276) 779-4062 or on Twitter@AWorrellTCN

Carolyn Honeycutt Honeycutt
Audit of last 14 months of Clerk of Court’s tenure notes repeat findings of previous audit

By Allen Worrell

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