City audit finds weak financial controls at Durham cemeteries that could lead to fraud

Weak financial controls at the city’s two cemeteries could lead to potential fraud, a report presented to the Durham City Council this week found.

A city audit examined Maplewood and Beechwood cemeteries. Both are operated by the city’s General Services Department, which had requested the audit.

The 120-acre Maplewood Cemetery on Duke University Road was founded in 1872. It is the burial site of prominent residents such as Dr. Bartlett Durham, after whom the city is named, and family members of tobacco magnate Washington Duke, the audit states.

Beechwood Cemetery, established in 1924 to consolidate neglected and crowded Black cemeteries, spans 25 acres off Fayetteville Street. It is the resting place of African-American business leaders and community members including John Merrick and C.C. Spaulding, the founder and longtime president, respectively, of the N.C. Mutual Life Insurance Co.; and Dr. James E. Shepard, founder of what became N.C. Central University.

In the last fiscal year, the cemeteries generated $535,064 in revenue.

Audit findings

The audit contained several key findings:

• Poor control over cash receipts, including receipts not deposited in a timely manner, sales agreements that were not pre-numbered and out-of-date equipment used to accept payments.

• Lack of management oversight and separation of duties between staff who collect and prepare cash deposits, and staff who record transactions. Having different individuals handle these matters would reduce the chance for an employee to misappropriate funds without detection, the audit states.

• Use of hand-marked maps to identify available grave sites, which increases the potential for errors, like plots being sold twice. Duplicate sales have occurred in the past, and the audit found maps being used are outdated. Cemetery staff could not definitively determine when the maps were last updated.

• Animal and pet violations that leave behind waste

In one transaction, General Services pointed to a potential discrepancy between plots sold and money collected. Audit Services staff could not conclude whether fraud had occurred, but reiterated that the handling of receipts was susceptible to deceit.

“The weak controls created a favorable environment and opportunity for fraud and misappropriation to occur,” the audit states.

In an email statement, General Services Director Jina Propst, who originally requested the audit, said no misspending has been identified.

Still, during Thursday’s City Council meeting, member Mark-Anthony Middleton said he was struck by the audit findings.

“It seemed like such a stark contrast to what I’m accustomed to hearing when it comes to the financial matters of the city as a whole,” he said.

Middleton asked if management of the two city cemeteries has deteriorated since the last audit.

Germaine Brewington, director of the Audit Services Department, said to her knowledge, this is the first time the city has audited cemetery maintenance and cash handling.

“The point of the audit is to shed light on these areas where we need to make improvements,” she said. “That’s exactly what this did.”

Audit recommendations

The audit made eight recommendations that included developing written operating procedures for the collection process, using pre-numbered sales agreements and organizing and ensuring that paper data sources are secure.

The audit also notes General Services has contracted with Plotbox Inc. to use software that will improve records management. The system is intended to manage information like deeds, death records, contracts and inventory of plots.

Propst said having robust software is an ongoing initiative.

“I’m hopeful that (with) all of the recommendations that we’ve seen, as well as the insights, we’re going to continue to make these tweaks and improvements,” she said. “And it’s a road map for us in the next year.”

Next steps

Al Walker, facilities operation manager, said the audit will help the General Services Department get resources to address problems it had already identified and was working on, like record keeping and cash handling.

Walker said he’ll now provide quarterly updates on steps being taken to address the audit findings.

“We’re excited about the direction of where the cemetery’s going,” he said. “There’s nothing that gives me pause to think that there’s going to be any issues going forward with it.”

Cemeteries’ future

The audit comes as more people in North Carolina are choosing cremations over burials. The Durham cemeteries offer both, as well as veterans’ sections, flat markers, upright headstones, and mausoleums, according to the city’s website.

Beechwood, the smaller of the two cemeteries, is running out of space for traditional burials, Walker said. One idea being considered is to design and build a columbarium, a wall or structure with niches to hold funeral urns.

The department is also exploring “green burials,” which would let families bury a loved one without a casket to minimize environmental impact.

Maydha Devarajan is an intern at The News & Observer, supported by the North Carolina Local News Lab Fund at the North Carolina Community Foundation.

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