On August 24, 27 and 30, 1999 Multnomah County Department
of Community and Family Services staff conducted a fiscal
compliance review in accordance with the Department's
Subcontractor Financial Procedures Manual. The review
is of financial systems regardless of source of funds
or type of service. It is not an audit, but a review of
the systems to assure compliance with required regulations,
laws and contract conditions. The review covered the period
of May, June and July 1999.
Below is a general summary of the findings and areas
of concern identified in the review. A complete report
is in the process of being written which will cite specific
compliance. The final report is expected to be completed
by September 15, 1999.
GENERAL SUMMARY OF AREAS OF NON-COMPLIANCE
I. ACCOUNTING SOFTWARE
* Not operational; crashes repeatedly; hardware appears
to be not current.
II. GENERAL ACCOUNTING KNOWLEDGE, including Method
of Accounting, Chart of Accounts, Cost Allocation
* Fiscal employees were unable to answer questions
regarding basis fiscal practices and procedures.
III. EXECUTIVE OVERSIGHT OF FISCAL SYSTEMS
* Non-existent;
* No pre-approval of expenditures by Executive Director
or VP;
* No financial statement review by Board of Directors
for fourteen months;
* Cash flow supervision and management does not appear
to be functioning effectively.
IV. MONTHLY FINANCIAL STATEMENTS
* Most recent financial statements reviewed by Board
of Directors (BOD) was the May 1998 financial statements,
presented in July 1998.
* No management letter from the 6/30/98 audit has been
found.
* BOD meeting minutes do not indicate that the 6/30/98
audit has been presented or reviewed.
* Accounting technical assistance provided by Susan
Utterback for two months and Cindy Chittendon for one
month do not appear to have had an effect on this critical
situation.
V. PROPERTY MANAGEMENT
* No property list exists
* Fiscal staff are unaware of Urban League's capitalization
level
VI. BANK STATEMENT RECONCILIATIONS
* At the time of the review, a temporary staff person
hired by Cindy Chittendon was working on the July 1998
bank statement reconciliation. No bank statements for
the 1998/99 fiscal year have been completed. No reconciliation
has been performed to either the checkbook or the general
ledger.
VII. CASH DISBURSEMENTS
* Check number series is out of sequence
* Many check numbers are unaccounted for and missing
* Approximately fifty blank checks were pre-signed
by Tanya Perimon before she left on vacation. During
this time and upon her subsequent resignation these
checks were used for the next few months "as needed"
* The Urban League has a Line of Credit with Key Bank
that is currently at its maximum of $250,000. The interest
rate is 9.75%. The monthly interest amount is $2,094.02;
and there is an average monthly late charge of ~$100
being assessed.
* Only 2 of 33 checks examined had adequate back up
documentation. The most common errors were:
1. Lacking pre-approval for purchase
2. No detail of services provided
3. No method to track 1099 Tax liabilities
4. Non-original copies (faxes, photocopies)
5. Late payment charges on the majority of payments
6. Confusing back up documentation. Back up doesn't
match payment amount.
7. Checks made payable to "Cash"
8. Checks made payable to an employee for specific
expenses (i.e. "entertainment") without documentation
of how the expenses were actually disbursed.
9. Checks signed by the payee.
* Mileage was paid to some employees. Mileage forms
had no employee or supervisor signatures. It appears
that gas may also have been available to these employees
via the Card-Lock gasoline location.
VIII. ACCOUNTS PAYABLE AGING LIST
* The report that was printed for the review was inaccurate;
there were missing entries and duplicated entries. For
example, the report showed numerous outstanding garnishments
that had been deducted from employee's paychecks but
had never been paid to the Oregon Dept of Revenue. (18
payments totaling >$2,000.)
* There was an extraordinary amount of outstanding
payables >90 days.
* Past due charges were being assessed on the majority
of billing statements.
* A large number of checks, two rolling filing drawers
full, had been printed and were being held in the accounting
office because there was no cash to cover these checks.
IX. NO OVERALL FUNCTIONING ACCOUNTING SYSTEM
* No General Ledger. Last update was from 4/2/99.
* No manual ledgers that tie to a central General Ledger
system.
* Lack of fully functioning and adequate accounting
software and hardware.
* It appears that no financial oversight is being provided
by the Executive Director and the Board of Directors.
X. EXPENSE DOCUMENTATION
* Executive approval was usually provided after the
check was written.
* Many non-original receipts (faxes, copies) were used
to make payment
* Many disbursements had no support; no back up documentation.
* Receipts were unavailable for almost every credit
card charge by upper management.
* The most recent four months of credit card statements
were "missing and unavailable" for our review.
* The Purchase Order system was dismantled and is currently
locked away after the Vice President took PO numbers
of out sequence (selected them from the rear of the
file) and placed only her signature as authorization
for purchase.
XI. CONTRACTS WITH INDEPENDENT CONSULTANTS
* Non-existent contract system
* Payments to individuals with no documentation of
the services provided.
* No tracking system for Federal 1099 Tax reporting
requirements.
* One consultant is also an Urban League employee (Phillip
Christian). He bills under the name of "P&A Cleaning
Services", but receives checks written to Phillip Christian.
He is also usually paid a month in advance for the cleaning
work (i.e. paid $1,450 on June 15 for the July cleaning
of the main office). Taxes are not deducted from these
wages.
* A consultant's invoice changed the agreement to include
payment of more dollars, but there was no record of
this change in the agreement.
XII. TRAVEL EXPENSES
* Numerous out of state travel ventures were taken
by the Executive Director, the Vice President. No pre-approvals
were noted on any travel paperwork.
* Three separate checks payable to "Statements Cruise
and Travel" for travel charges in the amounts of >$6,000;
>$6,000 and >$8,000 were paid by Urban League
in April 1999. These amounts appear to be excessive.
* Travel advances of between $100 and $250 were regularly
paid to the Executive Director, but no receipts, reconciliations
or reimbursements of these advances were found.
* No per diem limits for hotel, meals, ground transportation,
or incidentals were identified for traveling Urban League
employees. Numerous meals, hotels, and cash advances
were charged to the Urban League credit card in addition
to the travel advances provided by check prior to travel.
XIII. PAYROLL
* There appear to be violations of Bureau of Labor
and Industries (BOLI) overtime laws.
* Fair Labor Standards Act (FLSA) regulations governing
exempt and non-exempt employees appear to be incorrectly
administered.
* Urban League appears to have not defined its work
week according to FLSA standards.
* The payments for employee benefits are not current
(health insurance, etc).
* Employee deductions do not appear to be sent to the
appropriate destination within the legally allowed time
frame (i.e. TSAs, garnishments, United Way donations,
etc.)
* Payments are being made for two employees for "Flex
Pay/Retirement" on a monthly basis, but no documentation
supporting this expenditure could be found.
* The last three quarters of workers compensation payments
reviewed were all paid late, possibly placing the agency
at risk.
* Over $10,000 worth of manual paychecks have been
written in the past three months that have not yet been
entered into the Paychex system. This has resulted in
numerous problems:
1. Taxes and other withholdings that were deducted
from the employee's paycheck have not yet been paid
out by Urban League because they have not been recorded
through the organization's books.
2. Vacation pay that apparently should not have been
paid to an employee was paid twice.
3. Many of these manual checks do not have adequate
time sheets or adequate authorization.
4. Many manual checks have been written and have not
been captured by a tracking system.
* Seven of the eight pay rates reviewed in personnel
files do not match the amounts being paid through the
payroll system.
* Five of eight personnel files did not contain employment
applications.
* Life, Accidental Death and Dismemberment and Long
Term Disability insurance are available to all full
time employees, however only 24 employees are receiving
this benefit.
* Most time sheets are missing supervisor signatures
and many are missing the employee's signature as well.
* Many employees are listed as hourly employees in
the payroll system, but are listed as salaried in the
personnel system.
* Paychecks are automatically signed by the Paychex
system, so no one is verifying actual paycheck amounts.
Personnel action forms are generally unsigned.
* Tri-Met taxes (>$2,500 per quarter) have been
paid during at least two quarters of this fiscal year
(records for only two quarters were available). Not-for-profit
organizations are exempt from Tri-Met taxes.
* No authorization was found for Mr. Dark's auto allowance
payment.
* Time sheets don't tie with the Paychex records. (i.e.
a time sheet showed 80 hours Regular worked, but Paychex
showed 86.44 hours of vacation)
* Mr. Dark's time sheets regularly show that he works
between 133 and 232 hours for each half monthly pay
period (normal hours are 86). It is not unusual for
him to show that he is working 16 hour days, 7 days
each week without break.
* The external annual audit indicates that Urban League
pays 2% of gross wages into TSA accounts for eligible
employees. Such payments were not able to be confirmed.
SPECIFIC CHECKS OF CONCERN:
* There are numerous local Portland auto rentals costing
the agency thousands of dollars just in the past few
months, these include:
1. Enterprise Rental for $2,805.90 for 1/6/99 5/24/99
for Marnella Bingham. The beginning and ending mileage
on the receipt show a total of 170 miles, thereby costing
$16.51 for each mile.
2. Included with a payment of $558 to Thrifty Car Rental,
without documentation or invoice, is a memo from Connee
Devers: "Please allow this message to serve as the Urban
League of Portland's formal request that under no circumstances
are any vehicles to be rental to any employees of the
Urban League of Portland without the express verbal
authorization from Connee L. Devers as well as a signed
purchase order by Connee L. Devers. Thank you for your
assistance in this regard".
3. Two $3,150.00 payables to Coliseum Ford (one identified
as rental car, and one identified as car repair) were
listed on the Accounts Payable Aging as waiting to be
paid.
* Gas usage for two months for the Urban League of
Portland was $2,243.47 via automatic authorization at
a Card-Lock location (USE = $407.27; Management = $214.94;
Employment = $1621.26).
* A car payment check made payable to Lawrence Dark
for $800 was signed only by Mr. Dark.
* A check was written to Lovell Jones for $2650 to
pay for 53 payments of $25 per paycheck that had been
deducted from his paycheck for over two years for retirement
savings but were never deposited into a TSA account
for him.
* Conversely, payments of $100 and $20 for Mr. Dark
and payments of $81 and $20 for Ms Perimon were consistently
paid into Standard Insurance accounts labeled as "Flex
Pay/Retirement", but none of the fiscal staff could
identify what this was for.
* Connee Devers has a contract to be paid $18.229 per
hour from 5/3/99 through 6/4/99. The contract expired,
but she is still being paid the $18.229 hourly rate.
She explained that since Mr. Dark doesn't authorize
any overtime, she averaged her work hours during the
month of May and calculated that she was working an
average of 141 hours per pay period (80 regular hours
and 61 OT hours). So to make sure she was being compensated
for her work time, she began paying herself a straight
$2,570.30 each pay period (141 X $18.229) regardless
of the number of hours she worked.
* A check for $500 to Marnella Bingham was "to pay
for entertainment". No records of the disbursement to
the entertainers exist.
* A check for $500 to "Cash" was to pay for "stipends"
but no records of who cashed the check or of the disbursement
to the recipients exist.
