Guardianship Audit WebEx 10:00 a.m. 11:30 a.m. Wednesday, September 2 nd 1
Panel Members Lita McHugh, CPA, CIG Inspector General, Polk County Bob Melton, CPA, CIA, CFE, Inspector General, Lake County Anthony Palmieri, JD, CIA, CCSA Senior Internal Auditor, Palm Beach County 2
Presenter Bob Melton, CPA, CIA, CFE, CIG Inspector General for Neil Kelly, Lake County Clerk of Courts 3
Meeting Objectives Promote use of Best Practices in guardianship audits Discuss common situations encountered Promote consistency in treatment of issues Profession guardian feedback to Clerks Review recent legislative events 4
Workshop Overview Tips for initial implementation of Best Practices Common situations or issues encountered Issues with guardianship reports Unusual or questionable transactions Tools to prevent fraud, waste or abuse Legislative update 5
Role of the Clerk FS 744.368- the clerk shall audit the verified inventory and the accountings the clerk shall advise the court of the results of the audit the clerk shall report to the court when the report is not timely filed 6
What is an Audit? FS 744.102 states Audit means a systematic review of financial and all other documents to ensure compliance with 744.368, rules of court and local procedures The term includes various practices that meet professional standards, such as verifications, reviews of substantiating papers and accounts, interviews, inspections and investigations. 7
Role of Audits We audit to determine whether the transactions are reasonable, proper, and in the best interests of the ward. We report as an independent advisor to the Court 8
Neil Kelly Lake County Clerk of Court and Comptroller Bob Melton, CPA, CIA, CFE Inspector General Division of Inspector General (352) 253-1644 bmelton@lakecountyclerk.org www.lakecountyclerk.org
PRESENTER Lita McHugh, CPA, CIG Inspector General for Stacy M. Butterfield, CPA Polk County Clerk of Court & Comptroller 10
Implementing Best Practices Meet with key participants Assign key staff and target dates Review FL statutes and Best Practices Customize BP checklists for your office Develop a workflow & continuously improve Communicate with court, attorneys, and guardians and accept their input 11
Overview of Best Practices Level 1, 2, or 3 audit based on risk factors Requires exercise of judgment Utilize internal resources Internal audit/ inspector general offers audit expertise Probate staff have thorough understanding of Probate Rules and court procedures Establish procedures based on your resources 12
Overview of Best Practices (cont.) Establish procedures and workflows for various audit levels Begin with Level 1 audit Decide on need for Level 2 audit based on findings of Level 1 When positive indicators of theft or fraud, Level 3 audit may be called for 13
Steps for Level 1 Audit Review the case file Examine the report filed and any attached documentation Determine accounting period and timeliness Determine if beginning balance agrees to prior accounting or inventory ending balance Check for mathematical accuracy and agreement of all schedules to one another 14
Steps for Level 1 Audit (cont.) Assure that income is reported accurately Audit expenditures for questionable items Determine that all disbursements are for the benefit of the ward Examine disbursements for auto or real property Are disbursements consistent with the ward s remaining assets and style of living? 15
Escalation to Higher Level Consult with internal audit/ig for unusual or complex issues, such as trusts Escalate to a higher audit level if there are many discrepancies Level 2/ 3 audits use additional procedures Third party confirmation of bank balances Interviews of parties and non-parties Visit ward and observe living situation Review attorney/guardian fees for reasonableness 16
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Presenter Bob Melton, CPA, CIA, CFE, CIG Inspector General for Neil Kelly, Lake County Clerk of Courts 18
AUDIT RISK INCREASED IF: No court approval Red Flags Sale of Real Estate No closing statements included No independent appraisal, broker s price opinion, or Competitive Market Analysis A real estate agent is not used Sale to a trust without disclosure of beneficiary Sale of house not reported on annual accounting 19
Red Flags Use of Trusts Audit risk is increased when: No copy of Trust is provided Transactions of trust are not provided, if guardianship funds go into the trust Trustee is not independent of Guardian 20
Red Flags Sale of Assets Sale of assets without court approval Sale of vehicle for less than book value Sale of household furnishings without itemization and appraisal Sale of jewelry without appraisal (more than weight value if gems are involved) 21
Red Flags Miscellaneous Large or unusual medical bills Loan to guardian Money transferred to guardian (personally) Payment of guardian s expenses Excessive guardian or attorney fees Guardian fees in excess of the amount approved by the court 22
Red Flags Miscellaneous (cont.) Payment of housing expense not prorated based on number in household Food cost not prorated among members in household Annual accounting not completed properly All months of income streams not accounted for Large numbers of equity trades 23
Presenter Anthony Palmieri, JD, CIA, CCSA Senior Internal Auditor with Sharon R. Bock, Esq. Palm Beach County Clerk of Court & Comptroller 24
Clerk s Panel at FSGA Conference (L. to R.) Lita McHugh; Bob Melton; Hector Collazo; Anthony Palmieri; Clerk Stacy Butterfield; Clerk Ken Burke; Clerk Scott Ellis; Clerk Sharon Bock; FSGA Conference Co-Chair Karen Green. 25
Question-Best Practices? 26
Question-Best Practices? Is it allowable by law for the Clerk of Courts to join local FSGA Chapters and/or attend local chapter meetings and give presentations on relevant topics? 27
Question-Best Practices? 28
Question-Fees? It amazes me how some counties Clerk s of Court have the ability to know what time constraints a task should have when they have not been in the field working besides a guardian. Where does a clerk come up with their expertise on this time charge matter 29
Question-Fees? 30
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Question-Fees? 32
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Why am I issued a show cause when I am late with a report, however there seems to be no repercussions when the clerk s office fails to audit in a timely manner? 34
Legislative Priorities of Workgroup Prevent abuse of wards Punish abuses that do occur Provide appropriate oversight to evaluate Provide guardians with adequate credentials Provide consistency in the enforcement 35
Guardianship Proceedings (2015) Guardianship Proceedings CS/CS/CS/HB 005 (Rep. Kathleen Passidomo) Awaiting Governor s signature Regulation of Professional Guardians CS/SB 1226 (Sen. Nancy Detert) Died in messages (Sine Die) 36
Guardianship Proceeding Examining committee paid if petition denied Improves due process - ETG hearings AIP and attorney served - 24-hour notice Power of Attorney Not Suspended Parent, spouse, child or grandchild Unless verified motion No expert witness necessary for fees 37
Laws Impact to Clerks For-Profit Corporate Guardian Blanket Fiduciary Bond $250K 38
Laws Impact to Clerks Encourages use of a rotation system (wheel) for appointing guardian Improves transparency with the appointment ETG does not automatically become GA Appointment of GA based on rotation Unless there is a finding of fact by the court 39
Laws Impact to Clerks Guardianship plan dates Fiscal Filing 40
Laws Impact to Clerks Guardianship plan dates Fiscal Filing 41
Laws Impact to Clerks Guardianship plan dates Letters Month Filed 60 days Jan Nov Oct Not before 90 days Feb Dec Nov Mar Jan Dec Apr Feb Jan May Mar Feb Jun Apr Mar Letters Month Filed 60 days Jul May Apr Not before 90 days Aug Jun May Sept Jul Jun Oct Aug Jul Nov Sep Aug Dec Oct Sep 42
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Laws Impact to Clerks Chapter 744 Now Linked to Criminal Exploitation Statutes 44
Keys to Clerk s Duty to Audit Clerk s Independence Panel and objectivity at FSGA Conference Warming the guardianship bench Providing actionable information for the court Providing information that is not apparent to file Establishing a confidential relationship with the court Court has oversight Having immediate access to the court and records Being present and in the community!!! 45
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Questions 47
Panel Members Lita McHugh LitaMcHugh@polk-county.net (863) 534-7636 Bob Melton BMelton@LakeCountyClerk.org (352) 253-1644 Anthony Palmieri APalmieri@MyPalmBeachClerk.com (561) 355-6782 48