State officials released a report on Carter County’s audit for the 2015-16 fiscal year on Wednesday and noted a concern with the number of findings.
The number of audit findings climbed from three in the 2014-15 fiscal year to 10 in the current audit report.
“Many Tennessee counties are on the right track. We have seen a reduction in the number of audit findings across the state,” said Tennessee Comptroller Justin P. Wilson. “I am discouraged to see the opposite trend in Carter County. Progress can be made if county leaders focus on the accounting and reporting systems.”
In the report, Wilson noted auditors “identified numerous problems” with the county’s accounting records, including a failure to reconcile receivables, payroll deductions, liability accounts, and bank clearing accounts. The Comptroller’s Office also noted some of Carter County’s expenditures exceeded budget appropriations, and a report on postemployment benefit disclosures was not available until nearly six months after the fiscal year ended.
The audit report also disclosed that the Elizabethton/Carter County Animal Shelter is currently under review by the Comptroller’s Division of Investigations for alleged discrepancies in operations. Wilson said the findings of that investigation, if there are any, will be released in a separate report.
As part of the official state audit process, county officials are made aware of auditor’s findings and given the opportunity to prepare a response and, if necessary, a corrective action plan.
The audit note regarding the Animal Shelter investigation was listed under the Office of County Mayor portion of the audit report, and Carter County Mayor Leon Humphrey was given the opportunity to respond to the auditor’s notation.
“In July 2016, as a result of numerous constituent complaints, we initiated a top-to-bottom review of all policies, procedures, and day-to-day operations at the shelter,” Humphrey said in his response. “As a result, we have implemented a number of changes to ensure compliance with in-house as well as local, state, and federal regulations.”
“Please note that our initial findings actually resulted in self-reporting of this matter to both the Carter County Finance Director and the Comptroller’s Office,” Humphrey added. “We are fully cooperating with the Finance Director and the Comptroller’s Office and are providing information for their review and assisting them on a daily basis given the scope of the matter. Once the investigation is complete and findings are reported, we will immediately develop and submit a corrective action plan and take any corrective actions needed.”
Several findings reported in the audit relate to the county’s accounting practices and the lack of appropriate or timely posting or reconciliation of accounts. Auditors did note “management was not aware of most of the deficiencies (outlined) until we brought them to their attention.” Two of the audit findings related to accounting practices were repeat findings from last year — one regarding an employee health insurance bank clearing account for the school system and the other general ledger payroll liability accounts that were not reconciled with subsidiary payroll records, monthly billings, and payments made from the various county and the school system funds.
“Sound business practices dictate that financial records and accounts should be reviewed for accuracy and completeness, and all general ledger accounts should be reconciled timely,” states the audit report. “The failure to properly maintain accounting records on a current basis diminishes the usefulness of the finanicial records as a management tool and results in a loss of budgetary and accounting control and increases the risk that errors will not be discovered and corrected in a timely manner.”
“These deficiencies can be attributed to a lack of management oversight, the failure of management to take proper responsibility for the accounting records, and management’s failure to correct the findings noted in the prior-year audit report,” the audit report adds.
In the county’s response to the findings relating to accounting practices, the county notes that both the Finance Department and the School Nutrition Department experienced a management change during the fiscal year that resulted in “a miscommunication” regarding some of the monthly reports. The county also noted that for a portion of the fiscal year the Finance Department was understaffed which resulted in some duties not being completed in a timely manner.
Carter County Finance Director Christa Byrd noted in her response that corrective action has already been taken on a number of the issues pointed out by the auditors, and those changes will be followed going forward.
Auditor’s also noted that some of the county’s expenditures in three funds exceeded the appropriations approved by the County Commission during the budget process. Byrd responded that the Finance Department would better monitor those funds to ensure expenditures are properly estimated and fall in line with the allocations approved by the county’s governing body.
In the Office of the Assessor of Property, auditors noted that new owners of property which had previously been classified as greenbelt agricultural, forest or designated open space were not being required to re-apply for the designation as provided for in state law. According to the audit report, the Assessor is required by state law to notify new owners of the need to re-apply. If no new application is received, the designation shall be revoked, and the tax assessment on the property shall revert to market value assessment.
In his response, Assessor of Property Ronnie Taylor said his staff had met with state officials from the Division of Property Assessments to develop ways to monitor and review greenbelt and rollback assessment procedures. He said beginning immediately his staff will complete the necessary reports and queries on a quarterly basis to ensure the designations are correct.
Audit findings in the Circuit Court Clerk’s Office noted deficiencies with the software used for accounting. Circuit Court Clerk Johnny Blankenship responded that he has already spoken with the software vendor and was told those issues would be corrected before the end of the current fiscal year.
Blankenship’s office also had a recurring finding related to are excess undesignated funds that cannot be reconciled with the record books.
The problem was created by accounting and recording practices used in the past at the Clerk’s Office, and changes have been made in the office to reduce the problem, which has been ongoing for a number of years. Each year the Clerk’s Office reduces the amount to be reconciled as the bookkeeper works through old records to line up collected funds with their corresponding court proceeding.