‘Cause for serious concern.’ Clerk’s Office lacks proper financial controls, audit finds
A state audit released Monday found that the office that oversees financial operations of the Pierce County Superior Court had “significant lack of controls,” resulting in millions of dollars of delayed bank reconciliations and disbursements and a lack of general oversight of its finances.
“It is cause for serious concern,” state auditor Pat McCarthy told The News Tribune on Monday. “I have not in my eight years seen a clerk’s office have this problem in Washington state. People that are usually handling taxpayer dollars are very conscientious and attentive to dotting every I and crossing every T, so that’s why it’s very concerning.”
The Pierce County Superior Court Clerk’s office oversees the court’s legal financial transactions, including civil, domestic, felony criminal, civil commitment, probate, guardianship, paternity and adoptions, according to the 2024-2025 budget. The Clerk of the Superior Court is also responsible for managing and processing administrative documents and serves as the court’s record keeper. The office’s 2024-2025 budget is about $17.8 million.
According to the audit, in 2022 the Clerk’s Office collected $14.8 million in revenue for fines, fees and restitution payments, including settlements, but it was found that “office management did not know how to properly disburse the funds” and was also “unaware of the Clerk’s Office’s responsibilities for safeguarding and disbursing” trust funds accounts once they had matured.
“The clerk’s office is supposed to deposit these funds into separate bank accounts held on behalf of litigants or beneficiaries until their court-ordered maturity date,” the audit said. “The audit found 11 individual trust accounts had matured, but the clerk’s office had not disbursed any of the funds. Those 11 trust fund accounts represented $1.89 million, or 93 percent of the total trust account bank balances held by the clerk’s office.”
According to the audit report, the appointment of new clerk Constance White in December 2021, multiple vacancies in key financial positions in 2023 and significant staff turnover “resulted in the loss of institutional knowledge” and contributed to “a significant backlog of transactions that the Clerk’s Office has yet to process.”
Insufficient oversight and inadequate internal controls also increased the Clerk’s Office’s risk of misappropriation of public funds, the report said.
McCarthy told The News Tribune there was no evidence of fraud in this review and said the state agency will conduct an independent audit of the office’s 2023 finances later this year.
In a response statement to the auditor, Pierce County wrote that staff was aware of performance gaps in internal processes and knew that reporting timelines were not meeting accounting standards.
“The Clerk’s Office and the County’s Finance department have been working collaboratively to improve internal processes and speed reporting,” the county wrote. “Hiring for key staff roles has helped accelerate the pace of improvement in these areas. Enhanced training is also helping with reducing backlogs and meeting the reporting requirements of the state’s Administrative Office of the Courts.”
Despite assurances from the county that there was a plan in place to address issues identified in the audit, McCarthy told The News Tribune as of Monday morning no plan had been shared with auditors.
In a letter sent to the State Auditor’s Office on Monday afternoon, Pierce County Finance Department deputy director Wolfgang Opitz said the cause of financial issues laid out in the audit report were “unexpected senior and fiscal staff turnover, long-term staff absences, inadequate and undocumented policies, procedures, training and internal controls.”
Opitz said some of the specific actions the county has taken to rectify the situation include filling the vacant fiscal services manager position and other positions, training staff on financial practices and systems, daily reconciliations of payment receipts and bank balances, secure storage of warrants and payments, review of trust account reconciliations and processing a backlog of cases.
“Finance Department staff had processed 5,400 cases as of February 12, 2024. The Administrative Office of the Courts subsequently determined that another 5,034 cases need to be reviewed with 3,000 of them processed as of February 29, 2024,” he said in the letter.
Citizen tip led to audit
After receiving reports from the State Auditor’s Office through its Citizen Hotline, McCarthy said “serious concerns” about the financial situation at the Pierce County Superior Court Clerk’s Office “were ultimately validated by our review.”
Auditors found that the Clerk’s Office did not perform monthly bank balance reconciliations and as a result the bank balance reported in its financial system was $2.5 million less than the bank statement balance as of Jan. 2.
The audit found the Clerk’s Office also did not print and review monthly financial reports, as required by the state, filed a late unclaimed property report with the Washington State Department of Revenue in 2023 and did not have an independent review and approval process for receivables, according to the report.
As of Jan. 8, the average trust account was last reconciled to bank statements more than two years ago, the report said.
In one case it was found the Clerk’s Office did not create a trust fund account for a check exceeding $250,000 despite a court order signed and filed August 10, 2023 instructing the office to invest the funds into a trust account. As of January 2024 the paper check was still in the clerk office vault, the report said.
This story was originally published March 4, 2024 at 12:17 PM.
