A recent forensic audit of Wilkes Transportation Authority led to two of its former executive directors (Michael Norwood and Robin Kipp) being charged with embezzling a combined total of over $130,000 from the agency, but another audit on WTA was recently completed.
In addition to the forensic audit, which is done when illegal conduct is suspected, a scheduled annual audit of WTA finances for fiscal 2018-19 (ending this past June 30) was just completed and had noteworthy findings.
Conducted by Whiteville-based Thompson, Price, Scott, Adams & Co., the fiscal 2019-19 audit identified financial problems as expected. Howegver, it also cited “lack of segregation of duties” as a significant weakness in WTA’s financial controls. It said only two WTA employees (executive director and finance director) handle financial matters and that’s not enough to provide adequate checks and balances.
The forensic audit of WTA finance at least indirectly also identified this weakness because charges against Norwood and Kipp include conspiring with each other to embezzle from WTA when Norwood was executive director and Kipp was finance director.
This brings up something that raises questions.
According to minutes of a WTA board meeting in mid-May 2017, the board agreed to waive repayment of a WTA personal loan to Norwood before he resigned as executive director then in exchange for him agreeing to not speak about WTA. Also at that meeting, the board voted to fire Norwood if he didn’t resign as asked.
No public agency should make loans, but what was the WTA’s concern when it bargained with Norwood to not speak about the agency? At that point, the WTA board consisted of people representing human service agencies, the Wilkesboro and North Wilkesboro town managers and representatives of county government.
Kipp was named interim executive director at the meeting when Norwood resigned, and executive director in September 2017. At a WTA board meeting in late July 2018, Kipp resigned after board members said they had no faith in her plans for improving WTA finances.
The 2018-19 audit report said having a different person handle each aspect of a transaction (executing, recording and handling funds) provides better internal security, but it’s hard for small organizations to have enough staff for this. Therefore, “alternative controls” can be used. The report said the WTA board should provide some of these oversight controls.
The Wilkes County commissioners assumed the role of WTA board in early October 2018. During the Dec. 2 commissioners’ meeting, Commissioner Keith Elmore suggested returning to a WTA board consisting of other citizens. Whoever is on the WTA board should be willing to spend the time needed to stabilize the agency and better meet public transit needs in Wilkes.
Such hands-on involvement often might not be necessary or desirable for most organizations with governing boards. On the other hand, a person should think twice about the responsibilities and consequences of agreeing to serve as a board member or officer of a nonprofit organization – whether it’s a school organization or is related to local government.
There are potential “alternative controls” for organizations with small staffs and without governing boards, like most small businesses.
Obviously, maintaining thorough records of all transactions is important.
Storing this data somewhere that can’t be accessed by the person or persons who submitted it is an option, such as a hosted service or “in the cloud.” This will at least provide an audit trail and a way to investigate if malfeasance is suspected.
Business owners can have their CPAs periodically review financial statements. Numerous other suggestions can be found online.