One-and-a-half months ago, San Luis Obispo County Veterans Services Officer Dana Cummings quietly resigned from his position as head of that county department. Amid whispered rumors, both Cummings and county officials are being tight-lipped about the circumstances surrounding the Sept. 9 resignation.
An internal audit of the department recently released to New Times stirs more questions about the Veterans Services Department than it provides answers.
According to that August 2015 audit report and emails that New Times obtained through a Public Records Act request, Auditor-Controller-Treasurer-Tax Collector-Public Administrator Jim Erb’s office expressed several concerns with how the department was handling cash and donations. Cash handling policies are designed to prevent funds from being misappropriated or going unaccounted for. The issues were first addressed in an informal July 2014 audit, after which those issues continued to persist.
The August 2015 audit report will be presented to the Board of Supervisors at its upcoming Oct. 27 meeting. It will only be publicly discussed if a member of the board asks to pull it off the consent agenda.
Erb told New Times that his office became interested in the Veterans Services Department’s cash handling practices after Cummings made a June 2014 deposit to the county treasury. That deposit—which included 34 checks that were dated between Jan. 29, 2014, to May 20, 2014, and totaled $19,450—was in violation of the county’s cash handling policy, which requires timely deposits of all cash donations, including checks.
Specifically, amounts greater than $500 must be deposited by the next business day, and smaller amounts are to be deposited weekly.
Following that trigger, an internal auditor—whose name was redacted in documents submitted to New Times—met with Cummings on July 28, 2014, and then submitted findings from that meeting to County Administrative Officer Dan Buckshi in an Aug. 7 letter. According to that letter, the internal auditor and Cummings discussed several concerns, including a lack of receipts for cash donations; spending cash donations directly on supplies, instead of depositing the money first; only having one person, usually Cummings, handle cash from receipt to deposit; “potentially excessive director reimbursements”; and expenditure miscoding.
“We strongly stated that cash donations should never be accepted without issuing a receipt and that all cash donations must be deposited in the county treasury,” the letter states.
Erb told New Times that his office stresses that county employees follow the cash handling procedures in order to ensure that funds are used properly.
“When you have the same person that’s writing the receipts, depositing the money, and then at the end of the month reconciling the money that came in, they can be completely eliminating the transaction, and it would never be known,” Erb said.
For that reason, the cash handling policy states: “deposits should be made by an employee other than the cashier or the person who issues receipts.”
“It’s basic internal controls,” Erb said. “We’re not saying that happened out there. We’re just saying that when you have one person doing it all, there’s potential for it.”
Initial meetings between the auditor’s office and Cummings indicated that Cummings and the employees in his department were either not aware of the cash handling policies or that adherence to those policies was not a high priority, Erb wrote in an email to New Times.
“There is a lot to running a department, and cash payments were not a frequent event for the [veterans services officer] even though it is still very important,” Erb wrote. “I am sure they were occupied with a lot of tasks. That is why we perform cash counts, to try and help departments identify things that may slip through the cracks.”
The auditor’s office followed up by conducting a cash procedures and internal control review of the department on April 15, 2015. That review, which is routinely conducted with several county departments every year, was unannounced and included a review of all cash and cash equivalents on hand and all receipts, as well as an evaluation of internal control practices.
The Aug. 5, 2015, report detailing the review states that “while we determined all cash funds to be in balance at the time of our count, we found serious lapses in internal controls over cash and cash equivalents.”
Those lapses included some original concerns about cash handling practices, a lack of receipts, and purchases made on Cummings’ credit card. Following the report’s release, an Aug. 6 email to Buckshi from the auditor’s office states that the full audit revealed “more far reaching” issues than the office previously found.
The fact that the original cash handling policy violations were still happening and more pervasive than previously thought was a red flag for Erb, who gave Cummings more formal instructions to correct the practices.
Cummings, however, thinks these issues were exaggerated and at times focused on isolated incidents.
In an Aug. 19 response to Erb’s report, Cummings wrote that “though the department does not find the report completely inaccurate, the department head opinion is that there are serious discrepancies in how the report presents the situation within the Veterans Services Department.”
Cummings told New Times that he misunderstood the definition of “cash,” saying he thought it only referred to paper money, which he said he made a point to stop handling after the July 2014 meeting with the internal auditor. The first sentence of the county’s cash handling policy defines it to include paper money, several types of checks, and credit card slips.
Cummings also took issue with the assertion that money handling duties were too consolidated.
“It is simply not true that at times the veterans services officer handled all the functions of collection, depositing cash, and reconciling the department’s cash receipts and deposits,” Cummings wrote in the Aug. 19 response. “Yes, the department head had been handling the majority of these functions, but this has been due mainly to staffing issues.”
Cummings then noted that a department head assistant left employment on March 9, and a replacement began April 6, one week prior to the audit.
Cummings also wrote: “It is true that the department has had untimely deposits. Due to the fact that the department has never had adequate accounting staff.”
According to county budget documents, staffing in the Veterans Service Department increased from four full-time equivalent (FTE) positions in 2011—when Cummings started with the department—to nine FTE positions in 2015-2016.
Cummings told New Times that none of his staff was specifically hired or trained for accounting responsibilities. Instead, his staff was expanded to improve the delivery of services to veterans. Cummings added that he unsuccessfully sought to hire additional staff that would have helped with accounting duties.
“I was doing it the best I could, given the circumstances,” Cummings said. “No one would give me the staff.”
SLO County Human Resources Director Tami Douglas-Schatz confirmed that Cummings resigned effective Sept. 9. Neither Cummings nor Buckshi would elaborate on whether the Aug. 5 audit report was a factor in the resignation.
New Times has requested other documents pertaining to Cummings’ resignation, including a severance agreement with the county, but the release of those documents has thus far been denied, as County Counsel Rita Neal and Cummings’ attorney maintain that those items are exempt from the California Public Records Act because they contain confidential personnel records.
Contact Staff Writer Jono Kinkade at email@example.com.
The following documents outline the county auditor’s inquiry into cash handling practices at the Veteran Services Department.
A letter to County Administrative Officer Dan Buckshi from the auditor’s office detailing a July 2014 meeting with Veterans Services Officer Dana Cummings regarding cash handling policies.
A report detailing the findings from an April 15 audit of cash handling procedures and an internal control review of the Veterans Services Department.
An email from a member of the internal auditor’s office to Dan Buckshi outlining the findings from an April 15 audit of cash handling procedures and an internal control review of the Veterans Services Department.
Dana Cummings’ response to the report detailing the findings from an April 15 audit of cash handling procedures and an internal control review.
-- Melody DeMeritt - former city council member, Morro Bay