York County officials will draft a list of concerns about possible fraud or other wrongdoing at the former county museum foundation in advance of an audit of the nonprofit organization, according to an agreement between the county and the foundation.
The agreement between the York County Council and officials with the Culture and Heritage Foundation settles a lawsuit filed by the county last year against the foundation. The county sued in June 2013 after years of public fighting about the foundation’s fundraising and management of donations.
The county’s list of concerns about financial fraud will not be released to the public, according to the settlement. Also, foundation records reviewed by an auditor will remain secret unless problems are discovered, according to the agreement. If a problem is found, records associated with that issue will be made available to county officials.
A report on the audit’s conclusion will be made public.
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The audit will ensure accountability but it’s logical that the list of specific concerns about fraud would not be made public, said York County Council Chairman Britt Blackwell on Wednesday. The auditors “don’t need outside noise” while conducting their review, he said.
The foundation and its real estate development arm, the Sustainable Development Group, expect the audit will reveal no wrongdoing, said Jane Peeples, SDG board chairwoman. The process should bring closure, she said, to years of dispute between the county and the development group’s board and foundation officials.
The foundation and the county plan to share the expense of the forensic audit, which could cost around $70,000, the settlement states. Within one month, it’s expected that the county and the foundation will jointly choose an accountant to perform the audit.
The audit could last up to three months.
A forensic audit differs from a general financial audit in that the review investigates whether fraudulent financial activity occurred, according to the Association of Certified Fraud Examiners.
If the audit does not uncover financial wrongdoing, county officials have agreed to issue a statement confirming that no fraud was found. That would be an about-face from statements made in court filings against the foundation.
York County’s museum commission chairman has accused the foundation of giving other organizations donated money that was meant to support public museums. His affidavit containing that allegation was filed July 2013.
Foundation officials have denied all of the county’s claims in legal filings.
In suing the foundation last year, county officials said they were trying to protect donated money and land that was given to benefit York County museums. The lawsuit came after the foundation changed its mission from solely supporting county museums to financially supporting a broader range of cultural and historical preservation efforts in South Carolina.
The mission change was necessary, foundation officials have said, because the county in 2011 severed ties with the Culture and Heritage Foundation as the primary fundraising and donation management organization on behalf of York County’s public museums.
Prior to the lawsuit, the foundation pledged that it would still use donations given for York County’s museums only for that purpose despite its mission change.
The lawsuit centered around 274 acres of land that was given to benefit the museum system in 1998. Jane Spratt McColl donated the property, which is now set to sell for nearly $10 million and is expected to be used for a residential community. The land is located near Interstate 77 and Sutton Road, along the Catawba River in Fort Mill.
The settlement agreement estimates that nearly $8 million from the sale of the land will be put into an account to solely benefit York County museums and capital improvement projects. Other donated money will also be held by a third-party foundation, including a nearly $400,000 endowment that was started in 1995 to benefit York County’s museum system.
After closing costs and other associated expenses, the Culture and Heritage Foundation will receive $200,000 from the sale of the McColl land. Once the land is sold and final bills are paid, SDG will dissolve, Peeples said.
The lawsuit settlement agreement indicates that the foundation intends to continue as a nonprofit charitable organization. Foundation officials have agreed to change the organization’s name and not include the words “culture” or “heritage” to avoid confusion with York County’s museum commission.
As of March of this year, York County had spent about $140,000 of taxpayer money in its legal fight against the foundation. County Attorney Michael Kendree could not be reached on Wednesday for an updated cost.