Audit: Improper opening of accounts
PARKERSBURG – The state auditor’s annual report to the Wood County Commission notes improper procedures relating to the Smart Energy Solution Program.
The commissioners are scheduled to have an exit interview with state auditor’s office officials at 9:30 a.m. Monday during the regular commission meeting. Commission President Wayne Dunn is on vacation and did not attend this past week’s commission meetings; he is expected to be at the Monday meeting.
Prosecutor Jason Wharton confirmed he received a copy of the audit report, reviewed it and plans to attend the exit interview on Monday.
“The audit made a finding with regard to Commissioner (Wayne) Dunn improperly opening and maintaining a bank account without following the policies and procedures of the county while he was administering the Smart Energy Program. That was consistent with one of the many issues that I made the commission aware of in the summer of 2013 as a result of my review of the operation of Smart Energy. The commissioners took steps based upon recommendations from my office at that time which better protected county finances as it related to Smart Energy,” Wharton said.
“Given the steps taken once the full commission was advised of the concerns related to the Smart Energy program, I don’t expect any long-term ramifications related to this particular audit finding,” the prosecutor said Friday.
Two $10,000 grants were earlier awarded for the Smart Energy Program. The commissioners also authorized $48,000 from a closed out building bond fund account to be used in conjunction with the program.
The program provided energy audits to middle-income homeowners by partnering with the West Virginia University of Parkersburg’s Energy Assessment Program.
The prosecutor, in July 2013, advised commissioners they needed to review practices relating to the energy program. He advised the program account should be placed under administration of the clerk and sheriff for payments and record keeping, after he learned Dunn was maintaining records at his home and office.
Questions were raised when Commissioners Blair Couch and Steve Gainer learned Dunn had opened an account for the program without their consent or knowledge and that Dunn had written checks to himself through the program.
The account was opened as a business and nonprofit account, but the prosecutor noted at the time no such entity was registered with the West Virginia Secretary of State. It was also noted there were deposits with no source noted, and no supporting documentation for checks written by Dunn to himself and his dental office apparently for reimbursement of expenses related to the program.
Wharton noted there should be more than one signature on such checks as required by county procedures. There were concerns raised about audits being done on three of Dunn’s properties.
There were canceled checks showing Dunn paid for those audits.
After Dunn set up a checking account in the county’s name without authorization from fellow commissioners, wrote checks to himself and his dental practice for reimbursement of expenses he said were incurred on behalf of the energy program, hired one of his dental practice staff to manage the program and other issues raised red flags, the commissioners voted 2-1 to pull out.
No funds were received from the grants. Dunn cast the dissenting vote.
The recently completed state auditor’s report, signed by Deputy State Auditor Stuart T. Stickel, Chief Inspector Division, notes the bank account for the energy program was opened “without required authorization of the Wood County Commission.”
“We also noted that checks issued from the bank account did not have all three of the required signatures nor were the expenditures properly approved by the County Commission,” according to the audit report.
The auditor’s office states state code requires three signatures and approval of the county commission for the expenditures.
The report notes the problem was caused by “an elected official” who opened up and maintained this bank account without following the policies and procedures of the county.
The result was: “a bank account was opened without proper authorization of the Wood County Commission, expenditures were made without the approval of the county commission, resulting in a higher risk of improper expenditures. The absence of the proper signatures created an unnecessary lack of control over the transfer of funds and increases the possibility of misuse of funds,” according to auditors.
The county was directed by the auditor’s office to review applicable statues and comply with the provisions.
Wood County clerk Mark Rhodes said that has been done.
No funds were drawn down from either grant for any expenditures related to the program; none of the $48,000 which was in the general county budget was used in conjunction with the program and the accounts have been closed out.
Rhodes said all documents related to the program have been turned over to his office and have been reviewed, and it appears all expenditures related to the program were from private sources. Documents indicate some funds came from Dunn’s private foundation.
Couch noted he and Grainer attempted to address the issues when they became aware of the problems.
“We were made aware of it later and we tried to address the concerns as quickly as possible. We did anticipate there would be a finding in the audit,” he said.
Couch said there was concern the problems might affect the county’s ability to receive future grants.
A copy of the state’s audit report is provided to the federal government.
“No program is an island and it can impact future abilities to receive grants, or put us closer to the bottom of a pile of applications when we’d like to be at the top,” he said. Couch said the county often acts as the fiscal agent for a variety of grants which have “limited or no ties to the county” but because of the staff they have been able to manage the documents and requirements.
“I think the program was well-intentioned; it was just mishandled,” Couch said.
The program kicked off in the summer of 2012 with a $2,000 check from DuPont, according to bank records.
Officials with West Virginia Sustainable Communities, which awarded a $5,000 grant for the energy program, earlier questioned Dunn after concerns were raised. Officials with the program said they did not believe there was any mishandling of funds, only “inattentive record keeping,” according to Kelly Jo Drey, director of the Sustainable Energy Program at Bridgemont Community and Technical College.
That grant was originally awarded to Community Resources Inc. and apparently later transferred to the county.
Dunn voluntarily turned over records for the program earlier to the Parkersburg News and Sentinel after there were inquiries. He said he received no personal benefit from the program and paid for the three audits done on his properties. He earlier apologized for any confusion. He could not be reached Friday for comment, but was expected to be at the meeting on Monday.
Earlier Dunn said he tried to periodically update fellow commissioners regarding the energy program.
“There was never any suggestion of anything wrong so much as just having Jason look at it from a legal perspective. There was no question, I’m aware of, from the beginning, it was just a procedural thing. This program has taken a lot of time and a lot of work, but I knew since it’s under the county commission it’s important to share the documents. I knew it had to be done,” Dunn said in an earlier statement.
The county is required to have an annual audit. The audit cost the county $43,630. The auditors began their work about 2 1/2 months ago.