By: Rebecca Herman
The annual financial report for Johnson County has been officially completed for the financial year ending on June 30, 2015. This years audit resulted in findings and recommendations, which was reviewed with Johnson County management. The offices that had findings were the Johnson County School System, Clerk and Master, Register of Deeds, and the Sherriffs Department.
There are two types of audit findings from this past fiscal year, explained Russell Robinson, Johnson County Director of Accounts and Budgets. This audit contained both what is determined to be a significant deficiency in internal control over compliance and a material weakness in internal control over compliance. In simple terms a significant deficiency is a lack over proper management oversight or if you have a machine that uses two belts to operate and one of the belts slip off, the machine continues to run but at some point damage can occur if you do not stop and make the necessary repairs. A material weakness occurs when the lack of oversight causes the internal control mechanisms not to function in the manner that they were designed. Using the machine example again, both belts slip off shutting the machine down.
The offices of Clerk and Master, Register of Deeds, and Sheriffs Departments finding showed duties were not segregated adequately. According to the departments, this finding is due to each department only having two employees. The state would prefer they have at least three in the event that one employee is absent as it leaves only one person to deal with paperwork with no verification possible. The state prefers these departments have three employees so there is an additional person to verify and double check paperwork. This is not possible at this time, and according to Mayor Larry Potter, not necessary.
The departments have not had any deficiencies or paper work errors in the past, said Potter. If there were issues then we would consider hiring more people, but these employees are doing a great job. Weve had an excellent audit this year.
The Johnson County School department had two findings which were failure to request reimbursement for grant expenditures on a timely basis, resulting in deficits in unassigned fund balances and cash overdrafts and purchasing deficiencies. The first finding is due to purchases being made at the end of the school year and items and invoices being received at the June 30 cutoff date. Due to these late purchases, the fund requests could not be made until after the financial year ended. According to Director of Schools, Dr. Mischelle Simcox, from this time forward, no purchase orders will be issued and no purchases will be made after May 31.
New procedures are in place as to the drawdown of funds. Funds are no longer requested on a quarterly basis, requests are made monthly, and for some projects, which have heavy expenditures, so funds are drawn down twice a month, said Simcox.
The second finding with the Johnson County School department pertained to purchases being made without properly notifying a bookkeeper and appropriate policies and procedures not in place as to the use of the system credit card. To correct these problems, copies of procurement guidelines are being given to all appropriate personnel and blanket purchase orders will be set up in some cases. The school department will also be developing written policies and procedure for the use of credit cards.
We have established policies and procedures to help eradicate these findings. Finding one is repetitive from past years and measures have been established to ensure that funds are drawn down in a timely manner. We feel confident that these measures that are being put into place will eliminate these findings, Simcox continued.
The County Commission and the Board of Education have been made aware of these findings, Robinson said. If the material weakness finding is left unchecked there could be a potential negative impact to the entire county government that could include a decrease in bond rating, credit rating and the amount of available credit to the county. This could also make the county less competitive for both state and federal discretionary grants. However, none of these scenarios are happening at present. Both boards are planning to meet next month to discuss avenues to correct this process. Both my office and the Director of Schools office are working closely to come up with ways to build in additional safeguards into the process to keep this from happening in the future. Progress is already being made to correct these problems. Our focus does not need to be solely on the problem. The task now is to focus on designing and building in new mechanisms into the function to keep this from happening in the future. I look forward to the audit committee reviewing our efforts and reporting back that significant progress is being made to correct these problems, Robinson concluded.