Audit Reveals Potential To Alter Files, Payment Records; Jeopardizing Justice, More Than 4,000 Cases Closed In Error
by Glen Richardson
Claiming it “is a separate branch of government,” Denver County Courts initially refused to grant Denver Auditor Timothy M. O’Brien authority to audit the County Court System. Despite hiring outside counsel to dispute the right to audit, the Denver City Attorney’s office ultimately granted permission. Now completed, the audit of court operations reveals weaknesses in the court’s management of case files, as well as other administrative problems, but the court is refusing to go along with the auditor’s plan to make improvements.
The audit, led by O’Brien, CPA, found more that 4,000 case files closed in error. Equally as disturbing, in the current system personnel can alter case file and payment records without detection. Court management responsibilities lie with Terrie Langham, Denver County Judicial District Administrator, and Theresa Spahn, Presiding Judge of the Denver District Court. Mayor Michael B. Hancock appointed both, Wood in July 2017 and Judge Spahn in January 2017.
Court management is also relying on erroneous performance measures to make decisions. Out of more than 200 metrics Denver County Court reported, the audit found more than 100 do not have an established standard or goal. Thus the court is wasting resources and time compiling data for metrics with no meaning for the organization. “Due to the misaligned and inaccurate performance metrics, Denver County Court management risks not making appropriate oversight decisions or having an accurate picture of its operations,” O’Brien warns.
Cantankerous Court
County Court management, nevertheless, disagrees with many of the audit team’s recommendations regarding best practices for internal controls. O’Brien answers in response: “Court management states current policies, procedures and practices are sufficient; however, if that were the case, our audit team would not have found the problems reported in the audit.”
O’Brien initially had to seek a District Court ruling to grant him the authority to audit the County Courts. Previous auditors — who traditionally haven’t been CPAs — have conducted reviews of past court operations. The auditor’s office also made it clear that “it is unusual for the courts to have independent legal counsel rather than relying on the City Attorney’s Office to make a decision.” Nonetheless, City Attorney Kristin Bronson — in accordance with her charter duties — ultimately gave the go-ahead to conduct the audit. The County Courts, O’Brien’s office notes, had been aware of the pending audit since October 2016.
The Denver County Courts receive a $24 million appropriation in the city budget and generate $23 million in revenue. Denver laws require the auditor to conduct financial and performance audits and grant the auditor’s office access to city records, officers, employees and property in performance of those duties.
Case File Concerns
The audit found incomplete documentation in case files and more than 4,000 case files closed in error. Court management may also be using inaccurate information from performance metrics to make decisions. As a result, Denver County Court is at risk of not fulfilling its mission to administer justice in a fair, efficient and effective manner.
Case files are at the core of court operations as they are where all records and documents supporting actions related to a case should reside. The audit found Denver County Court case files contained inconsistent and incomplete information, hindering the audit team’s ability to perform audit procedures.
“It’s disturbing to me that the County Court is not keeping the consistent records they need to support case files and track actions taken in court,” Auditor O’Brien says. “We found several case files with missing documentation of key courtroom actions including the suspension of fines and penalties, the cancellation and reinstatement of a protection order, and defendants’ acknowledgments of the terms of probation.”
County Court has agreed to create specific rules to determine what records must be kept in case files. Court management plans to regularly review those case files, as well.
Altering Files, Payment
The audit work also found problems with how the court reviews closed case files.
“During the audit, we identified more than 4,000 improperly closed case files with outstanding fines.”
Seventy-seven percent of these errors happened when cases were either dismissed or transferred. The fees assigned to these cases should have been manually removed but were not, resulting in an approximate $24,000 overstatement of accounts receivable as of the end of 2017.
In addition, more than 300 cases were prematurely closed and should have been reopened. In other cases, the court had to issue refund checks for duplicative and overpaid fines.
Escaping Punishment
Court officials said they reviewed and addressed each of these errors; however, they did not share individual case-level information with the audit team for verification until after audit testing work had concluded.
“The court could be perceived as unfair if it closes cases inconsistently,” Auditor O’Brien believes. “Closing a case incorrectly could allow individuals to escape punishment, such as probation, community service, or payment of fines or compensation for victims.”
The audit also found a potential for misuse and errors in payment records. In the current system, personnel can alter case file and payment records without detection because the people who authorize transactions are also the custodians of the cash. The County Court’s cashiering staff is small, making segregation of duties difficult. However, the audit recommends a management review of audit logs and transactions to avoid possible abuse of the system.
Administering Justice
County Court also needs to update ordinances related to its operations. New national best
practices say fines and fees should not fund primary court operations including salaries and benefits. Although fees are currently being used in accordance with the current ordinance through two special revenue funds, the court should adopt the new principles, according to O’Brien. He says the County Court also needs to update outdated language in city ordinances governing the courts.
Further, court management chose not to prioritize certain IT-related controls. While there are many projects for the court’s information technology team, the audit identified significant areas of concern that should receive immediate attention. “We make these recommendations as a way to mitigate risks,” Auditor O’Brien explains. “If they aren’t addressed, these risks could potentially threaten the achievement of the court’s organizational goals.”
To ensure justice for Denver City-County citizens, O’Brien concludes: “The court management should listen to our recommendations to help improve their operations and to ensure they can complete their goals to administer justice for the people of Denver.”
In the printed edition of the February, 2019 Chronicle, we incorrectly identified the Denver County Judicial District Administrator as Kristin Wood. It is Terrie Langham.