An audit of the Nassau County Clerk's Office has found serious weaknesses in the control, oversight and accounting for more than $300 million a year in taxes and fees that flow through the office annually, Nassau County Comptroller Howard Weitzman announced at a Mineola press conference. As a result, Weitzman has directed the Clerk's Office to begin recording all its financial transactions in the county's financial system and asked State Comptroller Thomas DiNapoli to launch a comprehensive audit of County Clerks' offices in Nassau and the rest of New York State.

The audit found that the absence of accounting controls in the Clerk's Office has existed for years, and clearly predates the current Nassau County Clerk Maureen O'Connell, who took office in 2006, and her administration.

"The Nassau County Clerk's office has fewer financial controls in place than did the Roslyn School District when it failed to detect a multi-million dollar embezzlement and fraud," Weitzman said. "We found essentially no accounting system, an utter lack of financial controls - in short, a series of red flags that make the Clerk's Office exceptionally vulnerable to embezzlement and fraud.

"I want to be clear that our audit did not uncover actual fraud or illegality in the Clerk's Office," Weitzman said. "But given the lack of a real accounting system in the Office, such misconduct would not be detected using normal auditing techniques."

Weitzman said the audit found that the Clerk's Office assigns a single deputy county clerk responsible for almost all financial transactions - receiving funds, investing them, reconciling bank statements, transferring funds by wire, disbursing funds, and recording transactions - with no oversight, no written procedures, and no backup staff. "Concentrating all financial duties in the hands of one person means that errors and improprieties can go undetected," he said.

Pointing to another audit finding Weitzman said, "The Clerk's Office does not record most of its financial transactions in the Nassau Integrated Financial System (NIFS). Instead, the office uses dozens of primitive spreadsheets, subject to frequent manual alteration without proper review, to record most revenues, expenditures, banking transactions and investments."

Citing his authority under the Nassau County Charter, Comptroller Weitzman sent a letter to Nassau County Clerk Maureen O'Connell directing that the Clerk's Office begin recording all its financial transactions in NIFS immediately.

Weitzman said it was also determined that the clerk relies almost exclusively on a single bank, State Bank of Long Island, to handle tens of millions of dollars in deposits for the Clerk's Office, without soliciting competitive quotes for interest rates from other banks. The Deputy County Clerk for Accounting makes investment decisions for all the funds that pass through the Clerk's Office, Weitzman stated.

Weitzman also stated that cashiers in the Clerk's Office have the ability to waive or change fees and taxes without supervisor approval, and are not prevented from doing so by the office's computerized transaction recording system. He added that the Clerk's Office had no written policy and procedures manuals to document or regulate the way it manages cash, processes mail, receives revenues, disburses payments, invests its funds, or keeps its books.

The audit of the Clerk's Office was delayed for approximately two years, Weitzman explained, initially due to lack of cooperation from the previous county clerk, Karen Murphy, who refused to release documents or allow the comptroller's staff on the premises. After months of delay, the comptroller subpoenaed the clerk's records, and subsequent litigation resulted in a court order compelling the Clerk's Office to recognize the comptroller's authority to audit. O'Connell, did not permit the Comptroller's Office to begin fieldwork until March 23, 2006, Weitzman said.

"Once we began the audit, the Clerk's Office imposed strict and, in our view, unjustified limitations on the scope of our audit," Weitzman added. "As a result we terminated our field work in September 2006 after having documented the findings contained in this report. Since I became comptroller in 2002, no other county agency has forbidden our auditors from observing normal operations directly or speaking freely with employees, but that's what occurred here. In fact, during the audit, my staff was mostly confined to a conference room in the Clerk's Office."

Responding to the audit, O'Connell stated, "The audit by the county comptroller demonstrates that all monies are accounted for in spite of inadequate staffing in the clerk's office. The comptroller, who began his exhaustive five-year audit in 2002, confirmed what I have already known - this office can account for all funds remitted, but staff and resources are desperately needed." O'Connell went on to say, "My staff is doing an exemplary job with the limited resources the county has allocated for clerk operations. I plan to continue to request additional staff and the resources necessary to make improvements that will continue to assure funds collected in this office are further safeguarded. As far as certificates of deposits (CDs) are concerned, they all vary with length of time and amount and that governs the rate. Anytime we go out for a CD we canvass three banks and go with the bank that gives us the lowest rate. There is a record of these transactions dating back to 1999.

"I have no problem being scrutinized. We do need more supervision, but it is unprecedented that the comptroller actually wrote a letter to the county executive blocking my request for additional staff," O'Connell added.

Allen Morrison, director of communications for Howard Weitzman, stated, "We did not oppose the clerk's request for additional staff. We simply suggested to the county executive that the administration should wait for the outcome of our audit before deciding whether additional personnel were needed in the Clerk's Office. Our point was that the audit would shed more light on the operational needs of the office and how best to staff it.

"The Clerk's Office may indeed need more staff in some areas. But the audit showed deficiencies in financial controls that have to do with the ineffective management of the people already working there. And we recommend solutions, including assigning some accounting duties to other departments, such as treasury and comptroller's offices, that would require less staff in the Clerk's Office, at least in those areas."