This week an audit report of Goochland County’s Department of Public Utilities revealed what several county employees already knew— checks for connection fees were not being deposited on time.

In fact, the director of the department discovered undeposited checks on his office manager’s desk.

As part of an administrative investigation into the utility department’s operations, the report, obtained by The Gazette on Dec. 18, recommended that the county develop a better system of recording and billing utilities customers.

The report also stated, “Should the county proceed with its plan to move collection functions to the Finance Department and develop effective controls, this provides reasonable assurance of the prevention of future such situations.”

In an internal memo sent to all county personnel on Dec. 12, County Administrator Gregory K. Wolfrey announced that utility billing and purchasing had been transferred to the finance department. The memo also said the formally separate utility department had become a division of the community development department.

The audit report was prepared by Robinson, Farmer, Cox Associates, a firm hired by the county on Nov. 14 to review and assess the utility department’s handling of fees in fiscal years 2007 and 2008.

The report states, “It is recommended that the county plan adequate segregation of duties and supervisory review to prevent fraud and ensure timely departmental efforts in the future. Furthermore, more detailed monitoring of employees is warranted.”

These recommendations came after investigators found that the utility department’s office manager, Sharon Swift, had repeatedly failed to submit received checks to the county treasurer for deposit. Swift is no longer employed by the county.

Although connection fees were not routinely deposited on time, the report found that they have been accounted for and that no fraudulent activity took place during 2007 and 2008.

How much money is involved?

Some funds were not included in the report, including utility deposits and rental fees. Those funds added up to $11,895, or 7.53 percent, of the total undeposited funds. This would indicate that undeposited funds in 2007 and 2008 came to about $158,000.

A history of mismanagement

The audit notes that unremitted payments had been addressed several times by various county offices.

In response to a request by The Gazette, the county released emails and memos that that show repeated efforts to bring accounts up-to-date.

On Nov. 15, 2004, County Treasurer Brenda S. Grubbs sent a memo to Public Utilities Director Doug Harvey stating that utility deposits had been held in his office since March of that year.

“When these checks are held it causes insufficient funds, stop payments and accounts closed,” wrote Grubbs. “The county also loses interest that could have been earned on this money.”

The issue of uncashed checks apparently remained unresolved, as on June 11, 2007, Grubbs sent an e-mail to Swift requesting three undeposited checks dating from February of that year.

A week later, Grubbs sent an interoffice memo to all department heads regarding the deposit of funds. “All revenues collected for each department needs to be reported daily or reported by the week. Our Operating account loses interest daily when these checks are being held.” 

She added, citing the Code of Virginia, that public employees who oversee funds, and knowingly misuse or misappropriate those funds, could be guilty of a Class 4 felony.

By August 21 of this year Grubbs sent an e-mail to Swift requesting an updated utility account, which at that point was three months behind. She copied Harvey, Wolfrey and Director of Finance Myrtis Quarles.

In addition to undeposited funds, past-due invoices were cited as a problem in an e-mail sent by Wanda Tormey of the county purchasing department. On Dec. 22, 2006, Tormey wrote to Swift, Harvey, Wolfrey and Purchasing Agent Al Elias, “I have forwarded copies of past due invoices to you twice for approval… I have not received the approved and coded invoices back for payment… Also, in checking recent statements from various vendors, I have been missing charge tickets from your department.”

She noted that a local business had put Goochland on a “cash only” status due to an unpaid invoice.

Wolfrey responded to the e-mail that day, saying, “We need to tighten up on this… Goochland County does not expect to have a blemish on paying its bills.”

County Administrator Greg Wolfrey did not respond to repeated requests to comment for this story.

A loss of income to the county

When asked how much interest income the county has lost due to undeposited checks, Assistant County Administrator Greg Reid said, “There is certainly a loss of income when checks aren’t deposited. But as to what that total is estimated to be, I don’t have any answer.”

An issue raised by District 4 Supervisor Rudy Butler is whether those citizens whose payments were never cashed will now be expected to pay the bill immediately, in one lump sum.

“I hope that the county doesn’t try to make them pay at one time,” he said. “We have to stretch it out over a period of time.”

When asked how the county expects to handle such payments, Reid said, “Once everything is sorted out, I’m sure that will be one of the issues that will be discussed.”

What’s next?

Director of Community Development Don Charles said his intent is to present a report to the Board of Supervisors on Jan. 6. “We’re going to do the best we can to find out what’s going on and make recommendations.”

District 3 Supervisor Ned Creasey said he will be making his own assessment of the audit but he needs to see everything first. “We need to make sure it’s transparent,” he said. “I don’t think this is a good situation. I feel things ought to be dealt with in a proper fashion, out in the open.”

The Board of Supervisors has scheduled a closed-session-only meeting for Dec. 23 at 5:00 p.m. The topic of the meeting, as released by the county, is to discuss specific named personnel.