By Benjamin Price, News-Leader
Why didn’t outside auditors discover more than $1 million stolen from the Nassau County Clerk of Court’s Office over eight years?
That’s one of several questions lingering in the case of former clerk employee Julie Mixon, who confessed to the crime and committed suicide during a Florida Department of Law Enforcement investigation earlier this year.
The theft resulted in “financial irregularities” discovered by clerk’s office personnel in January.
But law enforcement records obtained by the News-Leader show that no one raised an alarm about missing cash or lack of oversight in the clerk’s office for years – not Mixon’s then-supervisor, former clerk of court Chip Oxley, or auditor Farmand, Farmand & Farmand.
The Fernandina Beach accounting firm was paid more than $450,000 over the past three years to audit just the clerk’s office. Auditor A.B. Farmand said Thursday he believes his firm had done “everything we were required to do in accordance with the rules and standards.”
According to FDLE records, Farmand did not discover missing cash or cite concerns about security or procedures in the office.
While checking receipts of office cash and deposits, samples from each department were reviewed. The FDLE report says none of the receipts the auditor reviewed were from the “special trust account,” where investigators found most of the theft occurred.
“Because no special trust receipts were included in the sample, the cash count forms were not examined by the auditors nor was the corresponding deposit slip,” the report says.
A.B. Farmand said Thursday that was possible because the sampling does not pull receipts from every fund. The funds are randomly selected, so some funds are sampled one year, and others the next.
“The receipts, when they’re inputted in the system, do not indicate which fund they’re from,” he said. “It depends what comes up on that test for that particular year.”
The FDLE report also refers to an annual “questionnaire” distributed by the auditor to evaluate procedures and security within the office. Farmand said these are used to establish what internal controls were being used to ensure security.
However, the information may have been irrelevant.
Farmand confirmed Thursday that the person who answered many of the questions was Mixon.
That may explain why the FDLE’s report found the answers to the questions often contradicted what was actually occurring in the office.
And, the report says, the questionnaires were the same each year, as were the answers to each question.
According to the report, one of the discrepancies involved collections, deposits and recording those deposits.
The questionnaire was marked “yes” when asked if receipts were deposited on a daily basis and collection totals amounted to bank deposits and journal entries.
However, that was not what law enforcement found.
In response to that answer, the report says, “It has been documented that Mixon manipulated numerous deposits and on many occasions entries were not made to the general ledger.”
The office also checked “yes” when asked if “adequate controls” existed for cash receipts, from the time money was received until the time money was deposited in the bank.
But, the FDLE report says, “there was a definite lack of physical control of cash receipts once the daily deposit slip was completed.”
Another question was whether there were adequate “physical controls” over unauthorized blank checks.
This question was also marked “yes” on the auditor’s questionnaire but the FDLE report says Mixon was able to use old blank checks to write “manual disbursement checks.” She found these, the report says, in a file cabinet located in the same room “where the office refrigerator and microwave were located.”
These disbursement checks were supposed to be authorized by Oxley. However, the report found Mixon repeatedly created disbursement checks not authorized by the clerk. Instead, she was able to create unauthorized disbursement checks and rubber-stamp them with Oxley’s signature.
“In effect, Mixon created unauthorized checks, signed the unauthorized checks and also received the previous day’s receipts on her desk every day,” the report says.
Oxley said Thursday there were stamps with his signature available to office personnel, however they were for use only in emergencies when he was unavailable. He also said he had ordered all old blank checks to be destroyed, and was not aware of any located in an unlocked file cabinet.
“If I had known any checks were in an unsecure location the person that put them there would’ve been fired,” he said.
Farmand said the questionnaires are standard auditing procedures, and there is a certain amount of trust in the answer to the questions.
“If the rules say one thing, and you do something else, it’s very hard to catch,” Farmand said. “We ask the staff people involved and they tell us what they’re supposed to be doing. Unless something comes up in a test to the contrary – and nothing did – there’s no record indicating who takes the deposit to the bank. It just comes from the bank, it doesn’t say who took it there.”
Farmand said since annual external audits only test a few dozen receipts out of the thousands that are processed in a year, it is difficult to catch individual instances where some cash may have been stolen. He said internal auditing, which could be done on a daily or weekly basis, would be more apt to find a discrepancy on a single day’s accounts.
“We just look once a year,” he said.
Oxley said he never received any indication from Farmand about any problems with the office’s procedures or security. He said he had wanted to hire an internal auditor, but the funds were not available.
County Finance Director Ted Selby said Farmand, Farmand & Farmand is still under contract and is currently working on its annual audit for the county. The firm has been the county’s auditor since at least 1979, said Selby.
It audits all county departments and constitutional offices, including the Nassau County Commission. The county paid $416,000 last year to audit the clerk’s office and the county commissioners. Over the past three years, while much of the theft was occurring, Selby confirmed the county paid Farmand a total of $467,506 to audit the clerk’s office alone.