RALEIGH — An examination of the Scotland County Superior Court Clerk’s Office by the NC State Auditor’s Office between July 1, 2018, and Feb. 28, 2019, reportedly uncovered areas of concern.
“The results of our audit identified a deficiency in internal control and an instance of noncompliance that is considered reportable under Government Auditing Standards,” a statement from the Auditor’s Office claimed. “The Clerk’s Office did not assess and collect sufficient bonds to protect wards (minors or incapacitated adults) in accordance with state law.”
According to Supreme Court Clerk. W. Philip McRae, however, the finding by the auditor “contains zero details about what happened.”
The audit report claims that 20 guardianship estates for wards requiring bonds were examined, and found five with insufficient bonds. It stated that the five estates totaled $1,347,658 but required $1,490,884 in bonds — and the Clerk’s Office only collected $165,802.
“Failure to assess and collect sufficient bonds from guardians could result in financial loss to the ward if the guardian misuses the assets in the estate,” the report stated. “… the clerk and the state may be liable for the financial loss if bonds are not sufficient.”
The State Auditor’s Office recommended that McRae’s office implement monitoring procedures, such as continual review of ward assets to ensure the bond assessed and collected remains sufficient.
“The auditor’s finding contains naked conclusions that we made procedural errors involving large dollar amounts which created theoretical risk,” McRae said. “I fully acknowledged our mistakes and we have refined our methods to prevent a recurrence.
” …it is a positive indication that nothing worthy of mention was revealed after this office was exhaustedly examined for over two weeks by your team of professional auditors,” McRae’s response to the state included.
State Auditor Beth Wood, however, took exception with that response.
“When the audited entity’s comments are inconsistent or in conflict with the findings, conclusions, or recommendations in the draft report, or when planned corrective actions do not adequately address the auditor’s recommendations, the auditors should evaluate the validity of the audited entity’s comments,” she said.
“First, the Clerk’s response misleads the reader about the extent of our audit and what the results indicate,” Wood added. “The Clerk’s response is misleading because our audit was not exhaustive and provides no assurance that all significant problems have been identified.
“Second, the Clerk’s response inappropriately minimizes the importance of the auditor findings by trying to explain away the errors,” she continued. “While it is appropriate to determine why the errors occurred so that internal controls can be improved, the Clerk’s Office should not use those reasons to excuse or minimize noncompliance with state law.”
On Wednesday, McRae said in a statement that efforts to gain additional information from the state have been rebuffed.
“My request to include facts in the finding to help a reader understand what happened was denied,” he said. “When I set forth the facts in my response, unwarranted aspersions were cast by the auditor in its counter-response.
“It should be noted that: the accuracy of the facts I presented have still never been challenged; and, based solely on the items examined, not one single instance of dishonesty or financial loss has ever been identified,” McRae added.
He went on to say that Scotland County residents should remain confident that the Superior Court Clerk’s Office follows the law.
“The largest error dollar-wise had nothing to do with whether we followed the law to protect the assets, because we did,” he said. “Our error was failure to place documentation in the file of the many other steps we took to ensure compliance. This constitutes an error and I take full responsibility. However, additional risk to the assets is practically nonexistent even if theoretically possible.”
The Clerk’s Office in Scotland County, according to McRae, opens about 15,000 files per year.
“I gave them unlimited access to all our records and our full cooperation,” he said. “For two weeks they poured over anything they wished to see. The 20 files containing the five errors were only a small fraction of the items examined.
“In the big picture, we were overwhelmingly successful — but I admit we have room to improve in this area (because) 100% accuracy is our constant goal,” he added.
McRae said that, in the end, his office has taken the findings constructively and taken steps to prevent a recurrence — but added that “perhaps the state auditor should re-examine her own methods too.”
W. Curt Vincent can be reached at 910-506-3023 or cvincent@laurinburgexch.wpenginepowered.com.
