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Land Records department chairs Nicole Lueth, at left, and Eric Buitenwerf explain to the county board why shrinking the workforce could expose the county to liability for lack of people to exercise oversight. (Sarah Smith / Enterprise)

Leaner workforce brings risk of fraud

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Leaner workforce brings risk of fraud
Park Rapids Minnesota PO Box 111 56470

By Sarah Smith

Hubbard County officials are beginning to discuss the downside of creating a leaner, meaner workforce – fraud.

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With fewer employees responsible for more duties, the current system of checks and balances is undergoing scrutiny to keep a single employee from embezzling $1 million, as Carlton County recently discovered.

The issue came before the board Tuesday when Recorder Nicole Lueth, now co-manager of the new Land Records Department, pointed out a potential vulnerability the county faces.

“We need to put more cross checks in place,” she said, suggesting guidelines that would prevent the same employee from transferring a property deed and recording it. She said property deeds could be a vulnerable area for an unscrupulous employee to take advantage of.

“We need to set up an internal policy to check the work process from start to finish,” she warned the county board.

“We always have fraud exposure.”

In Carlton County, a longtime landfill employee was recently charged with embezzling $1 million in an elaborate scheme she devised while collecting fees at the gate.

A criminal complaint says she developed an ingenious method of manipulating the cash register, and falsifying receipts.

The criminal complaint said Joanne Marie Wappes, 53, routinely manipulated the cash register tape, and substituted a correct tape, which made the days’ end receipts balance.

Hubbard County has been criticized by outside and state auditors for simply not having enough bodies to implement checks and balances.

It’s the bane of small counties.

“There had been a finding in our audit for many, many years about the segregation of duties,” said Auditor Pam Heeren. “And that’s been in there and it was in there again this year.

“Our response that we try with the number of people we have to keep things segregated and have our checks and balances” in place.

“When you cut the workforce you don’t have enough people to separate the duties and all of a sudden you’ve got one person” taking care of multiple tasks that ideally should be assigned to others.

“But that’s with any place,” Heeren added. “My finance department now is going to have three people. It’s real tough to separate certain duties when you don’t have anybody else to hand them off to. I think we’re going to have to be very careful about it and we’re trying to reassign duties to do that but when you’ve only got so many bodies…”

Vacations also pose a problem, especially with senior staff, often leaving an office staffed with a single person. Training is another manpower drain, Heeren said.

One embezzlement scandal might turn the tidal wave back.

“There’s certainly that option and that’s been the state auditor’s or our auditor’s focus for the last several years is the fraud,” Heeren said. “They’re seeing it in other counties and the biggest concern is that there aren’t the checks and balances.”

County employees are bonded through the state insurance plan for errors and omissions.

“Segregation is hard to do when you don’t have any people to do it with,” Heeren said.

Efficiencies could be undermined if the county is victim to a fraud claim.

“We’re one of those offices that’s very susceptible to those things so we have to be very careful,” she said.

“We still have elections and I have no idea how we’re going to do that,” Heeren said.

But there is an upside to the amalgamation of offices into the Land Department, which Heeren isn’t part of.

Lueth told the board duplication of services is being identified and weeded out.

“That’s what we did all this for,” commissioner Kathy Grell said.

In other business, the board:

n Accepted low bids for Phase 2 of the county’s renovation. The project is anticipated to cost $3.548 million. With contingencies, the construction management and architect/engineering fees, the total project cost is $5.628 million.

The bids were broken down into 20 separate bid packages so local contractors would have a chance to compete. Many local bidders did get contracts. Work should begin in the next couple weeks.

Offices on the county office building’s second floor are being moved to accommodate the work, which includes an addition to the south face of the property.

n Set another timber auction for Oct. 14, with 22 parcels up for sale.

n Set a public hearing date on geothermal heating and cooling systems to enact a new statute. The public hearing would be Nov. 5 at 12:30 p.m.

The issue has been a hot-button one since late winter when a Lake Garfield couple was hauled before the Board of Adjustment after their newly installed system sprang a leak and began draining into the lake.

Members of the Hubbard County Coalition of Lake Associations suggested additional input to the Shoreland Management Ordinance section that regulates geothermal systems, especially if those systems drain back into a lake.

n Unanimously voted to request a two-year addition for the Hubbard County Comprehensive Local Water Plan to submit its offering that would incorporate other models for minor watersheds. The overall plan would be much better, said Julie Kingsley, director of the Soil and Water Conservation District.

n Approved South Transfer Station winter hours for 7: 30 a.m. to 1 p.m. Saturdays beginning Oct. 19. Currently the transfer station is open all day Saturday.

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Sarah Smith
Sarah Smith is the outdoors editor. She covers courts, business and breaking news in addition to outdoors events.
(218) 732-3364
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