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The makeup of a panel investigating alleged misspending at the Department of Social Services has come under scrutiny after it concluded top Mecklenburg County managers took proper steps to address accounting failures.
Two of the five members of the Audit Review Committee are county administrators – County Manager Harry Jones and one of his top lieutenants, John McGillicuddy, who helped write the report.
Some commissioners say the arrangement undermines public confidence in the probe and hinders the committee's ability to find out who's to blame. The report was presented to the county board of commissioners this week.
“It seems odd to me that our county manager and an assistant county manager who reports to our county manager would be a part of a committee to make a determination about whether management responded appropriately,” Commissioner Harold Cogdell said. “It undermines to some extent … the appearance of what this committee is charged with having done.”
Commissioner Dan Murrey, a member of the audit committee, said members will look into whether they should remove administrators from the panel in the future.
Supporters of allowing managers on the panel say it does not compromise investigations and allows administrators to provide commissioners with useful information.
The committee is investigating DSS programs, including a Christmas charity that solicited public donations. Recent financial audits revealed the county cannot account for tens of thousands of dollars from spending programs meant to help children and poor families.
Officials said they may never learn what happened to the money because receipts are missing or altered.
Some commissioners have said Jones and other top managers should shoulder some responsibility. Jones met with commissioners in closed session this week to discuss the issue.
County officials established the Audit Review Committee in 1998 to oversee financial audits and make recommendations to the commissioners. The move followed the indictment of former county elections director Bill Culp, who pleaded guilty to taking $134,000 in bribes and kickbacks.
The county set up the committee so it must include two commissioners, two county administrators and a community member.
Jones and McGillicuddy, county general manager, are the administrators on the committee. Murrey, commissioner Bill James and certified public accountant Ward Simmons are the other members.
Earlier this week, the panel presented a report to the board of commissioners that is critical of the accounting practices at DSS and says further investigation may be needed.
But the report endorses reforms county managers made in response to problems found by auditors.
“Management's responses to the audit findings are appropriate and sufficient in strengthening internal controls and addressing inconsistent and insufficient supervision,” the report says.
McGillicuddy wrote a draft of the report and took suggestions on revisions from other committee members.
McGillicuddy and James disagreed about what committee members had concluded during a meeting.
In an e-mail to committee members and officials, James suggested the report say: “Management's responses to the audit findings are not appropriate and sufficient in strengthening internal controls and addressing inconsistent and insufficient supervision because they do not determine who at DSS was responsible for the inconsistent and insufficient supervision (lack of control environment) and because Management cannot determine how long the control environment has missing from DSS Finance.”
McGillicuddy objected, writing back that James' statement was inaccurate. Murrey and Simmons sided with McGillicuddy.
McGillicuddy told the Observer he volunteered to write the report and “provided this draft to all the members for revisions until the members were satisfied with the report that was provided to the Board in its agenda.”
Commissioners originally appointed McGillicuddy to the audit committee in 2004.
“I hope that my participation on the Audit Review Committee has provided expertise and insight from a management perspective that is useful to the overall charge of the committee,” he said.
Jones did not return calls or an e-mail seeking comment.
Commissioners have long debated whether to keep administrators on the Audit Review Committee.
James said he unsuccessfully lobbied to keep county managers off the committee when it was formed. The presence of administrators prevents the panel from conducting fully independent investigations, he said.
In the DSS case, Cogdell said the committee structure could raise negative public perceptions.
“The makeup would have instilled a little bit better public confidence if you had members of this board in conjunction with some type of outside auditing agency and not someone that the outcome of the recommendation is in some way going to impact or show ... you did a good job or you didn't do a good job,” he said.
Former commissioner Parks Helms said he can understand why some say the arrangement represents a conflict of interest. But Helms said he supported putting administrators on the committee to provide intimate knowledge about the daily workings of county government.
“I never thought having members on management would compromise the integrity,” said Helms, who is former member of the Audit Review Committee. “They are just as interested in finding errors as members of the board.”
Fred Clasen-Kelly: 704 358-5027
