Auditor criticizes sheriff’s fund handling

A state auditor’s report criticizes Rappahannock County Sheriff Connie C. Smith for holding work release funds in a separate bank account and making purchases with them without an appropriation from the county Board of Supervisors.

Smith maintains she has done nothing wrong, and Commonwealth’s Attorney Peter H. Luke said “the code is not clear” and that at best the issue is a “dispute about the best way” to deposit the money, while County Administrator John W. McCarthy says “there hasn’t been a hint or suggestion [any] funds were misused.”

Smith said that she will be depositing the funds with the county treasurer, as the audit says she should.

The Sheriff’s Office deposited a cashier’s check dated Oct. 6 for $40,280.22 with the office of County Treasurer Frances A. Foster on Oct. 7.

Foster showed the Rappahannock News a copy of the check the Sheriff’s Office submitted to her office.

Asked how often the deposits of work release funds should be made to her office, Foster said they should be done “on a regular basis. That would be weekly, I would think.”

The deposit came a month after Walter J. Kucharski, Virginia’s auditor of accounts, sent a letter to Board of Supervisors Chairman Roger A. Welch with his findings from an annual review.

A copy of the letter dated Sept. 9 was also sent to Smith, Foster, County Commissioner of the Revenue Beverly S. Atkins and County Administrator John W. McCarthy.

A copy of the letter was mailed to the Rappahannock News with no return address to indicate who sent it.

Also enclosed was a copy of a letter from the 2009 auditor’s review, which also found fault with holding work release money in a separate account.

“I clearly know what this is about and I’m not going to stoop to that level,” Smith said during an interview in her office on Tuesday. She did not want to speak on the record about why someone may have sought to make the auditor’s report an issue by drawing the newspaper’s attention to it.

The letter is publicly available on the auditor’s Web site at

Smith explained how the work release program operates:

Inmates at the county jail deemed eligible can be released to go to their jobs in the community. “It lets these people keep their jobs and support their families somewhat” while serving their sentences, she explained.

Each work release inmate must wear a GPS tracking bracelet while outside the jail.

Inmates can keep a portion of the wages they earn but must give some back to cover the cost of the monitoring. The Sheriff’s Office pays a monthly fee for the GPS bracelets the inmates wear and the cell phones deputies carry to keep track of them.

“My work release books are open for anyone who wants to look at them,” Smith said. “My door is open … I know every penny is there. People who know me know that I haven’t done anything wrong.”

Smith said that although she is the person who authorizes expenditures from the work release account, her name is not on the account. That’s by design, she said, to avoid the type of trouble sheriffs elsewhere have encountered.

“I took my name off the account so I don’t have control of the money,” Smith said.

Two of her senior officers make the deposits of work release money. That’s done weekly or biweekly, she said.

“I don’t write the checks,” senior officers do, she said. “All of my accounts require two signatures” before purchases are made.
Some of the money has been used for other needs at the Sheriff’s Office. Work release funds were needed to match a grant to purchase defibrillators in treating someone in cardiac arrest. Five units were purchased for officers to keep in police vehicles.

“There was no work-release program until I got it started two years ago,” Smith said later. “These funds would not be coming in to the county if we did not have this program, and that’s a big reason I brought it in.”

Since the handling of the money has become an issue, “the money I collect will go over to the treasurer,” Smith said. “We are going to keep track of all that money here. We’ll be keeping our own books here. We’ve always kept the books.”

The sheriff added, “I have deposited all of the money from the work release program with Frances,” meaning Treasurer Frances Foster.
Smith said she talked about the handling of the work release money with the commonwealth’s attorney “the first year I was written up” in 2009.

Luke told the News on Wednesday that it should be noted that the work release money “is not taxpayers’ money.” The money comes from the inmates and goes to defray the costs of monitoring them. They must also submit to drug testing.

The separate account kept by the sheriff for work release was a “flow through” account — money is received and then disbursed from it without an appropriation, Luke explained.

“Nothing in that [auditor’s] letter shows any misappropriation of funds,” Luke said.

Reading the state code, “one can come up with various interpretations,” the attorney said.

Indeed, Smith made a copy of the section of the state code on the handling of funds by a sheriff that calls for the prompt deposit of funds with a treasurer or finance director. It goes on to list as exceptions the funds and fees collected for the commonwealth or a locality pursuant to an order of the court, fees as allowed by law and “funds held in trust for prisoners held in local correctional facilities.”

Smith said she based her holding of work release funds using that section as justification.

“I think she was trying to run it as easily as possible,” Luke said in speaking of the sheriff’s handling of the work release account.
“The code is not as clear as it could be. It leaves a gray area,” he said.

Work release is hard to budget for, and the costs can vary according to the number of inmates in the program at any one time, he said.

“Money comes in when you run a jail,” Luke added. “She had the authority to collect the money.”

County Administrator McCarthy said “last year, she turned over the money to the treasurer and the board of supervisors appropriated the money for what she wanted” after the letter from the auditor was issued.

He said the county sheriff is in a “fairly unique” position as far as elected public officials in being able to collect funds.

He said he believes the sheriff was under the impression she could accumulate the funds over a period of time before depositing them with the treasurer.

“What is unclear to me is whether she has to give every little bit of money she collects” at the time she collects it, he said. That “becomes cumbersome,” he noted.

“My understanding is she gave all the money she accumulated to the treasurer,” he said during an interview Oct. 14.

“There hasn’t been a hint or suggestion the funds were misused,” he added.

He noted that work release funds have been used to pay for construction of an addition at the county jail that is currently under way.
Depositing funds with the treasurer and requesting an appropriation from the supervisors provides an “intervening step” for the tracking of funds as they are collected and spent, McCarthy said.

Kucharski, the state auditor, said in a telephone interview Oct. 14 flatly that “you can’t expend the money without an appropriation …. if you spend money without an appropriation, you can be held personally accountable … this is the taxpayers’ money, not the sheriff’s.”

In a situation where the money isn’t being deposited, the treasurer can’t compel compliance but “he or she can ask for the money,” Kucharski said.

“If the money was spent without authorization he or she can say ‘we want our money back’ and send her a bill,” he said.

He also faulted the sheriff for not reconciling the work release bank account monthly as recommended by the Virginia Sheriff’s Accounting Manual.

“Reconciliations are an essential internal control to ensure the proper accounting for funds and the timely correction of errors. The Sheriff should ensure the bank account is reconciled and the reconciliation reviewed monthly,” stated Kucharski’s letter.

“Section 15.2-2506 of the Code of Virginia requires an appropriation for all expenditures. The Sheriff should transfer all funds to the Treasurer and obtain an appropriation from the local governing body before spending any more of these funds,” Kucharski’s letter said.

The letter stated that the sheriff is in compliance with state laws, regulations and other procedures relating to the receipt, disbursement and custody of state funds in other respects.

Kucharski also reviewed the collections and remittances of the county treasurer and commissioner and issued no findings against them.

The latest examination of financial accounts covers a one-year period that ended June 30.

About James Ivancic 68 Articles
James Ivancic is a reporter for the Fauquier Times in Warrenton, Va. Contact him at