Audit critical of state program for the blind

Friday, May 4, 2001 | 9:54 a.m.

CARSON CITY -- A legislative audit claims a state program for the blind is plagued with problems of improper financial reports, cozy business relationships and the possible falsification of expense records.

The audit released Thursday found that Services to the Blind and Visually Impaired does not use "effective financial management practices" in managing the Business Enterprise Program, which administers a program for blind operators of vending stands.

The bureau, which has six employees, oversees the 25 vending stands that had $8.3 million in sales in the 12-month period that ended Sept. 30. The blind operators pay a fee to the state based on net proceeds. The state received $748,059 during that period.

In one case, the operator of a stand deducted $26,000 as business expenses -- for gifts, travel and personal expenses -- from his revenues.

"Bureau staff did not detect the inappropriate expenses because they did not periodically review operator records to verify the information reported," the audit said.

The audit showed the operator falsified his report of expenses, saying the money went for janitorial services, office supplies and other operating expenses.

The examination, by auditors Sandra McGuirk, Eric Wormhoudt, Paul Townsend and Stephen Wood, said the bureau itself "directed vending facility operators to improperly report expenses on monthly profit and loss statements."

The bureau directed the operators to inflate their expenses, which would reduce fees paid to the state, the audit found.

"For one operator, this reporting was done to recover the $166,000 cost of a statue erected near the operator's new business location," said the audit. The bureau said this was to benefit the marketing of the stand.

"The bureau granted the operator approval to use his business account to purchase the statue and be reimbursed through reduced fees," said the audit.

Operators purchased $90,000 in equipment and received a write-off. But the equipment was never recorded as state property as required.

The audit also claimed the bureau did little to monitor operators who bought supplies from companies in which they held an ownership interest.

Myla C. Florence, director of the state Department of Employment, Training and Rehabilitation, which oversees the bureau, said she accepted all the recommendations to step up monitoring of the accounts.

She said the improved oversight should be in place by May 30.