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Only minor deficiencies in county audit report

By Rebecca Herman
On December 10, 2014, The Division of Local Government Audit released the Annual Financial Reports of Johnson County, Tennessee for the fiscal year that ended on June 30, 2014. According to a letter from the comptroller of the treasury, the report was given to the county mayor, road superintendent, director of schools, the county’s director of accounts and budgets, and the purchasing agent.
There were no major deficiencies within any programs, but there were some deficiencies in internal control within three departments, and therefore Johnson County “did not qualify as a low-risk auditee.”
The first finding is with the Johnson County School System. According to the Summary of Audit Findings, deficiencies were noted with cash management of the School Federal Projects Fund. There were several items listed on the audit that explain the deficiencies mentioned in the summary report. The main reasons were as follows: “school department personnel failed to request reimbursement for grant expenditures related to the Teacher Incentive Fund program on a timely basis, the School Federal Projects Fund had a deficit unassigned fund balance of $87,115,” within the projects fund; “warrants were issued…that exceeded cash on deposit with the county trustee by $59,978,” and warrants were issued that went beyond the “available cash balance on deposit by $9,496.” According to the document, the “deficit and the cash overdraft were liquidated with the receipt of the Teacher Incentive Fund reimbursements subsequent to June 30, 2014.” Basically, the school system spent money before it was received from grants/programs and ultimately had to pay the difference from another fund.
The Comptroller’s recommendation for the Johnson County School System was for personnel to monitor their cash balance, and to make sure future requests for reimbursements from any grant funds be made in a timely manner. It was also recommended that “school department personnel and the director of accounts and budgets should not issue warrants exceeding cash on deposit with the county trustee, and the trustee should not pay warrants that exceed available cash as required by state statute.”
The second finding was with the sheriff’s office where “profits earned from commissary operations were not remitted to the county monthly.” According to the audit, in November 1989, the state attorney general decided that any profits earned from commissary operations are to be viewed as “local revenues” and should be managed the same as other local revenue. Section 8-24-103, Tennessee Code Annotated, provides that all funds earned by the Sherriff’s Department should be reported to the county trustee monthly. However, in August 2014, the department submitted $80,000 “accumulated commissary profits to the county trustee.” The reason the monthly deposits to the trustee are important, according to the auditors, is that this practice decreases the chance of “fraud and a misappropriation of county assets.”
The report contains a response from Sheriff Mike Reece stating he “had no knowledge that these profits were to be remitted to the county trustee monthly,” and had remitted accumulated money on two other occasions since 2011. However, Sheriff Reece has heeded the recommendation and is now remitting the funds to the county trustee monthly.
For the rest of the story, pick up a copy of this week's Tomahawk.