Bwick News: District Attorney's office audit reveals irregular expenditures and management thereof
neillh...@earthlink.net
Forensic audit reveals "potential fraud," financial mismanagement, lack of control
- 18 hrs ago
Brunswick Judicial Circuit District Attorney Keith Higgins speaks on the steps of the Glynn Courthouse during the Crime Victims’ Memorial Ceremony in April 2024.
MIchael Hall/The Brunswick News
A lack of institutional controls within the Brunswick Judicial Circuit District Attorney’s office during the last four years allowed potentially fraudulent activity to occur via cash withdrawals, travel expenses and other means that led to a nearly $1 million budget shortfall, a forensic audit of the office shows.
But the auditors were unable to complete the full scope of the audit due to unorganized record keeping and lack of documentation, the audit said.
Glynn County Commission Chairman Walter Rafolski said the audit shows what the county already knew, that District Attorney Keith Higgins has mismanaged his office for years.
“The audit confirms what the counties have experienced for months, an alarming lack of financial management and oversight in the District Attorney’s Office,” Rafolski said. “The findings are deeply troubling and reflect a complete breakdown in the systems that safeguard public money.
“The five counties expect immediate corrective action and full accountability. Taxpayers deserve better, and we intend to ensure they receive it.”
Higgins said Thursday that financial personnel who were responsible for record keeping referred to in the audit are not longer working for him and were gone at least seven to eight months prior to when the inquiry began.
Additionally, Higgins said many of the findings in the audit have already been addressed.
THE LEGAL SAGA
Glynn County commissioners and the four other counties that fund the judicial circuit — Camden, Wayne, Appling and Jeff Davis — requested Baker Tilly Advisors conduct the audit to identify the origin of the budget shortfall in fiscal year 2024 that is the subject of an ongoing legal dispute between Glynn County and the DA’s office.
Higgins filed a lawsuit in fall 2024 after months of arguing with the county over what it says is more than $900,000 in unreimbursed payroll expenses from fiscal years 2024 and 2025. The county had for around 20 years acted as the district attorney’s payroll processor under a voluntary agreement in which the county would cut paychecks for all the DA’s office employees. It would then be reimbursed for portions outside of the county’s financial obligations to the DA’s office.
That agreement ended last year amid the dispute over the budget shortfall.
Higgins has said the shortfall arose out of hiring too many assistant district attorneys too quickly in an attempt to address a backlog of cases in the circuit.
Higgins claimed in his original lawsuit that the funding the county isn’t providing his office to cover the shortfall is preventing it from operating properly, leading to a growing backlog of cases and other issues.
The county has said it is upholding its financial obligations to the office even after pulling out of serving as the DA’s office payroll processor.
Higgins has said he has attempted to negotiate with the county multiple times to fix the situation. The county said it took part in those negotiations but that they broke down because of how Higgins was using 5% money, which comes from a 5% penalty on fines. The county has said that money is intended only for the Georgia Crime Victims Compensation Program.
Mediation is set to begin on Tuesday under Brunswick Judicial Circuit Senior Judge Kathy Palmer.
The counties in the circuit asked earlier this year for the Prosecuting Attorney’s Council of Georgia to investigate Higgins and remove him from office.
AUDIT OBSERVATIONS
Auditors from Baker Tilly reported in its 10-page audit that records related to expenses, deposits and other financial transactions were stored in numerous boxes when they began their work at the DA’s office. They described the record keeping as highly disorganized, “making it extremely difficult to conduct a meaningful analysis.”
“The lack of structure and accessibility in the records presents a significant challenge to ensuring sound financial management and accurate accounting practices,” the auditors wrote in their observations.
Internal Control Issues
The DA’s office has not reconciled its bank account since 2022, something Higgins told auditors he was unaware of.
“This lack of oversight resulted in non-business-related transactions going undetected and created an environment vulnerable to fraud, including potential misappropriation of funds,” the auditors wrote.
Additionally, the office had not been audited financially since Higgins took office, they noted.
The office also lacked a formal approval process for staff leave, does not have a formal approval process in place for staff travel and lacks a formal process for reviewing and approving its annual budget prior to submission to the counties for approval, the audit found.
Higgins told auditors he had instructed his former office manager, who was not identified, to create Personnel Action Forms that were never used and authorized hiring employees but did not know what their salaries would be, allowing new hires to be paid more than authorized amounts by as much as $60,000.
Cash Withdrawals
Twenty cash withdrawals and 12 checks were written to compensate staff who were working on what was called the “File Project,” which was an effort to organize the office’s file room. The total expenditure, based on what auditors could find, was more than $17,000.
The cash payments were not reported to Glynn County and were not reported on employees’ W-2s, violating IRS regulations, the auditors wrote.
Cashier’s checks for more than $113,000 and more than $63,000 were initiated by the former office manager to purchase vehicles from Woody Folsom Automotive. Higgins told auditors that he gave informal approval to purchase the vehicles, but he was unaware cashier’s checks would be used to pay for them.
He also told auditors that most checks issued to the former office manager bore his stamped signature. He acknowledged signing a few checks but said that other checks that had his signature on them may have been forged.
Out of 16 checks issued to the former office manager that Higgins provided to auditors, it was difficult to determine whether the signatures were stamped, signed by Higgins or forged, the auditors wrote.
Possible Fraud
Auditors identified possible fraudulent transactions they believe were made by the former office manager.
The first instance was for flights to New Orleans out of Jacksonville and back in September 2021 that were charged to a District Attorney’s office card.
The second was a $303 cash withdrawal from a DA’s office bank account at a RaceTrac convenience store made while the office manager was reportedly in the area for personal reasons in May 2023.
The third was a group of charges of more than $1,800 to the DA’s office accounts related to the office manager flying her husband to Las Vegas for a conference in July 2023.
The fourth was for travel expenses that appeared to be personal in nature made during a trip to Las Vegas in April 2024 that totaled more than $1,200.
There were also more than $14,000 in checks that were made payable to the DA’s office employees that were outside of their salaried payments. Twenty checks written during the fiscal year 2023 totaling nearly $7,200 were issued to the former office manager and came from the office’s operating account.
There were another 17 checks totaling roughly $7,200 issued in fiscal year 2024 that included no documentation or explanation of a legitimate business expense, the auditors found.
These checks do not include the 16 Higgins provided for review.
RESULTS AND
RECOMMENDATIONS
“Our audit of the (office) identified multiple critical deficiencies, most notably in the area of internal controls,” the auditors wrote. “These weaknesses contributed to questionable cash withdrawals and transactions that raise concerns about potential misappropriation of funds or fraudulent activity.”
Auditors recommended developing and enhancing fiscal policies and internal controls to ensure they are followed, monthly bank reconciliations, annual financial audits, establishing a leave approval policy and tracking system, travel authorization documentation, cash withdrawal controls, hiring authorization and budget alignments, and signature stamp controls.
They also recommended the annual budget be formally reviewed by the DA before submitting it to the counties for recommendation.
“As the leader of the (office), the DA holds the responsibility for establishing a culture of accountability through effective internal controls and ensuring staff adherence to those controls,” the auditors wrote.
The county, in a statement released Thursday, echoed that sentiment.
“While the District Attorney continues to attribute his office’s financial failures to his former office manager, the ultimate responsibility for oversight and operations rests solely with him as the elected District Attorney,” the county said.
HIGGINS’ RESPONSE
Higgins said in a statement on Thursday that an external bookkeeper was brought in before the audit began to reconcile all monthly bank statements back to when he took office in 2021.
“The external bookkeeper then continued to monthly reconcile the office’s bank statements, and I required our new office manager to make ledger entries and scan receipts into our computer-based bookkeeping system to document exactly what was purchased for each expenditure,” he said.
The signature stamp that was misused has been eliminated and a new policy is in place for all personnel action forms that must be personally signed by Higgins, he said.
A position control system is also now in place, he said, ensuring that new employees will only be hired if there is sufficient funding.
Leave request forms were already in place prior to the audit as well, Higgins said.
He also said any cash withdrawals made by the former office manager were unauthorized by policy at the time she made them.
“During the audit process, the office and I fully cooperated with Baker Tilley,” Higgins said. “During this process, I became aware of the misappropriation of government funds by the former office manager. I referred the matter to law enforcement for investigation. I recused myself and the office from the matter, and I obtained the appointment of another prosecuting attorney to the case from the Prosecuting Attorneys’ Council of Georgia.
“Going forward, I am committed to having an annual financial audit conducted at the end of each fiscal year.
“I am the District Attorney, and I am not resigning.”