The state has recommended a procedural overhaul of Laurinburg-based nonprofit, Four-County Community Services for allegations of mismanagement.
The state Department of Health and Human Services audit, filed on Jan. 25, investigated 18 allegations against Four-County, 15 of which proved to be substantiated.
According to the audit, 10 of the allegations were of such “serious concern” that they merit the attention of the state auditor.
Four-County receives $21 million annually through state and federal grants to administer 16 Head Start programs as well as weatherization assistance and housing assistance funds to clients in Scotland Bladen, Brunswick, Columbus, Hoke, Pender, and Robeson counties.
The audit found that Four-County Executive Director Richard Greene used an agency vehicle to travel to fishing tournaments, allowed Four-County business partners to sponsor him in said fishing tournaments, and concealed a nine-year marriage to Annie Rothwell, Four-County’s fiscal manager, in violation of the agency’s nepotism policy.
The audit involved interviews of Four-County employees and vendors, as well as examinations of Four-County board meeting minutes from June 2009 to June 2012 and accounting records.
“According to the FCCS Administrative Policy and Procedures Manual (Travel Policy): ‘Each agency vehicle is assigned to an employee, one of whose responsibilities it is to maintain a travel log for that vehicle,’” the audit said. “Mr. Greene stated he does not have to account for his travel because he has integrity, and because the FCCS board of directors said he doesn’t have to.”
According to the audit, Four-County was unable to document that the Four-County board of directors had granted Greene free use of an agency vehicle.
DHHS recommended that the Four-County board require Greene to maintain a travel log and to report the value of Greene’s personal use of the vehicle as a taxable fringe benefit.
“The FCCS board of directors should either require the executive director to maintain a travel log for his assigned vehicle in accordance with FCCS policies or formally adopt and approve an exemption from FCCS policies,” the audit said. “The exemption should also clearly specify whether the executive director may also use the assigned vehicle for personal/non-business activities.”
When reached by The Laurinburg Exchange Thursday, Greene declined to discuss the audit. He said that his board planned to hold a workshop to discuss the audit, but would not say when the workshop would be held. He als said the workshop would not be open to the public.
“This agency takes all of the allegations very seriously and there will be adjustments made if needed,”Greene said.
According to the audit, the Four-County board of directors was as a whole unaware of Greene’s marriage to Rothwell until June 2012. Rothwell is supervised by the Four-County comptroller, who is in turn supervised by Greene.
The audit found that, between July 31, 2007 and Sept. 13, 2007, Greene and Rothwell printed 1,320 checks together. In addition, Greene stated on multiple Internal Revenue Service forms that he was unaware of any relationships between key Four-County employees.
“According to the 2009 and 2010 Form 990s filed with the Internal Revenue Service and signed by Mr. Greene as the FCCS Executive Director, FCCS listed Mr. Greene and Ms. Rothwell as key employees,” the audit said. “In Section A, ‘Governing Body and Management’ of the tax forms, FCCS answered ‘No’ to the following question: ‘Did any officer, director, trustee or key employee have a family relationship or a business relationship with any other officer, director, trustee or key employee?’ Based on the relationship that exists between Mr. Greene and Ms. Rothwell, the response to this question on both 2009 and 2010 Form 990s was not accurate. Mr. Greene, as FCCS Executive Director, signed both returns, attesting, ‘Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete.’”
The audit recommended that several of Rothwell’s privileges be rescinded.
“To strengthen the internal control system and minimize segregation of duties weaknesses, the FCCS Board of Directors should consider revoking Ms. Rothwell’s ability to grant and rescind access rights to herself,” said the audit. “Ms. Rothwell should not be allowed to print checks with her husband (Mr. Greene) and Ms. Rothwell should not be allowed to perform monthly bank reconciliations.”
The audit also found that five Four-County vendors were listed online as sponsors of Greene in fishing tournaments between 2000 and 2006. One business confirmed $3,000 of sponsorships in the time period between July 2010 and June 2012, according to the audit.
“In order to strengthen internal controls and minimize/avoid any future appearance of impropriety/collusion, the FCCS Board of Directors should review and approve all contracts with vendors doing business with FCCS to ensure that there are no conflict of interest situations and the contracts have been competitively bid and awarded in accordance with FCCS policies,” the audit recommended.
The audit also recommended that the Four-County board approve and clearly document all financial relationships with other agencies, in response to several “special projects” performed at Sandy Grove Baptist Church, where Four-County leases space for a Head Start program.
Four-County began a lease agreement with the church in 2005, agreeing that the agency would lease the space for $1 per year, paying $250 per month for maintenance. The building leased by Four-County is a free-standing structure, not connected to the church, the audit said.
The audit noted a letter from Sandy Grove detailing a $13,700 installation of televisions and multimedia equipment in the fellowship hall, pastor’s office, and church sanctuary. The letter requested that Four-County pay $13,200 between July 2009 and June 2011.
The audit recommended that Four-County and Sandy Grove negotiate a new contract providing for purely monetary reimbursement for the leased space.
“Contracts should be clearly written to reflect the financial terms of the agreement between the respective parties,” the audit said. “FCCS should negotiate a contract that reflects the true cost of the leased space and discontinue its practice of funding special projects each year to improve the church’s property.”