Categories
Featured NewsTracker

Corker Against Auditing the Fed

Bob Corker thinks an audit of the Federal Reserve would be disastrous both for the U.S. and “the free world.”

Tennessee’s junior senator, who sits on the Senate Banking committee, told attendees at a Bloomberg breakfast last week that he “can’t imagine anything worse for the nation or for the free world than for Congress to get involved in monetary policy.”

Nevertheless, Corker said he supports more transparency in how the Fed regulates banks.

Corker, who served as commissioner of Tennessee’s Department of Finance and Administration in the Republican administration of former Gov. Don Sundquist, characterized “this audit the Fed thing” as an unwelcome invitation to more congressional involvement in monetary policy. He called that out as “a problem.”

All the same, Corker said he expects Congress to take some action on making financial regulations — such as how the Fed administers stress tests at large banks — more transparent.

In January, Sen. Rand Paul and Rep. Thomas Massie, both libertarian-leaning Republicans from Kentucky, introduced legislation calling for a congressional review of the U.S. central bank’s monetary policy discussions, which have been exempt from legislative scrutiny since 1978.

The Federal Reserve Transparency Act of 2013 passed the GOP-controlled U.S. House last September with over 100 Democrats joining 227 Republicans in support of the bill, but it was never taken up by the Democrat-controlled Senate.

Audit proponents had hoped demands for hearings last year by U.S. Sen. Elizabeth Warren, D-Mass., regarding allegations the New York Fed was taking it easy on the banks it regulates, signaled broader support for a congressional audit. However, Warren recently announced her opposition to the audit proposed by Paul.

Categories
Press Releases

Comptroller: Fmr. Jackson Co. Clerk Took Funds for Personal Use

Press release from the Office of the Tennessee Comptroller of the Treasury; November 26, 2013:

A new audit released today on Jackson County details how the county clerk admitted to taking public money for her own personal use.

During the course of a routine audit of the county’s books, auditors discovered that more than $10,000 in collections hadn’t been deposited in the bank. Five days later, the county’s records indicated that the money had been deposited in the bank.

The clerk, Mary Jo Matthews, told auditors she had occasionally taken money for her personal use, but always replaced the funds. Matthews was indicted by the Jackson County Grand Jury in August and resigned from her job as clerk earlier this month.

The audit also uncovered numerous other problems in other county offices with bookkeeping and money-handling procedures, including delayed bank deposits, backdated purchase orders, incomplete leave records and unbudgeted expenses.

The audit, which was conducted by the Comptroller’s Division of Local Government Audit, can be found online at http://www.comptroller.tn.gov/la/.

“Obviously, it is very disappointing when someone in a position of public trust uses that position for personal gain,” Comptroller Justin P. Wilson said. “It’s also very disappointing that Jackson County had so many other issues, some of which have been discussed in audits from previous years. Jackson County should work with its newly-established audit committee to correct the internal control and noncompliance deficiencies noted in the audit report.”

Categories
Press Releases

Lewis County Trustee Office Audit Finds Personal Use of Public Funds

Press Release from the Tennessee Comptroller’s office; Oct. 21, 2013:

An audit by the Tennessee Comptroller’s office has found Lewis County’s trustee improperly took more than $44,000 of public funds for personal use. In addition, the trustee made accounting mistakes that overstated the amount of cash his office had in the bank by more than $173,000. The report was released today by the Comptroller’s Division of Local Government Audit.

The trustee withheld all or part of 24 deposits that were supposed to be deposited into the office’s bank account. He also wrote himself seven checks payable to himself or to cash that didn’t appear to have any business purpose related to the office.

Information about the cash shortage in the trustee’s office has been reviewed with the local district attorney general, the state attorney general and the county mayor.

The audit also found mistakes in other departments within Lewis County government. These mistakes included failure to properly document purchases; failure to pledge adequate securities to protect county funds above Federal Deposit Insurance Corporation coverage; failure to have employees operate from separate cash drawers and to use separate computer usernames for more accountability; failure to properly spend money from the sheriff’s department’s confidential drug fund; and failure to properly assess property within the county for tax purposes.

“In all, our auditors had a total of 22 findings – which is an unacceptably high number,” Comptroller Justin P. Wilson said. “I hope and expect that county officials will take the corrective steps recommended in the audit so these errors do not occur again in the future.”

The report can be found online at: http://www.comptroller.tn.gov/la/.

Categories
Press Releases

State Audit: ‘Serious and Pervasive Problems’ with TNInvestco

Press Release from the Office of Justin P. Wilson, Tennessee State Comptroller, November 13, 2012:

Audit Finds Serious and Pervasive Problems with the Department of Economic and Community Development’s TNInvestco Program

Tennessee’s TNInvestco Program, which is administered by the state Department of Economic and Community Development (ECD), has serious and pervasive problems, according to report released today by the Comptroller’s Division of State Audit.

TNInvestco was launched in 2009 as a program that provides tax credits to businesses which invest in certain types of start-up companies. The program was launched as a way to create jobs, foster entrepreneurial activity and infuse fledgling companies with capital. Recipients of the tax credits are chosen through an application process that requires them to meet certain criteria in order to qualify.

The Comptroller’s report details that the program was launched without adequate safeguards in place to determine that the companies receiving start-up funding were actually eligible to do so. Those safeguards are still lacking.

Auditors found that ECD failed to:

  • complete adequate annual reviews;
  • complete its annual report; or
  • evaluate program risks in its annual risk assessment.

Auditors also found that ECD did not ensure that the companies receiving tax credits:

  • completed statutorily-required investment strategy scorecards;
  • provided required accounting reports of specific procedures; or  provided audited financial statements in a timely fashion.

Without adequate documentation, top ECD officials might have difficulty determining if the required investment strategy benchmarks are being met and if investments are free from fraud, waste or abuse. Furthermore, the lack of documentation raises questions about how accurate reports can be provided to the governor’s office.

The audit also highlighted some other issues with ECD that are unrelated to the TNInvestco program. To view the report online, go to: http://www.comptroller.tn.gov/repository/SA/pa12060.pdf

Categories
Press Releases

Comptroller Audit Finds Drugs, Money Missing from 2 Wilson Co. Task Forces

Press release from Comptroller of the Treasury Justin Wilson; July 11, 2012: 

A lack of proper safeguards led to missing money and drugs seized by two anti-crime task forces run by law enforcement officers in Wilson County, an investigation involving the Comptroller’s Division of Local Government Audit has revealed.

The Tennessee Bureau of Investigation (TBI) and the Federal Bureau of Investigation (FBI) asked the Comptroller’s office to assist in an investigation related to cash, vehicles and other assets seized by the Joint Violent Crimes Task Force (JVCTF) and the Safe Streets Task Force. The Wilson County Sheriff’s Department and the Lebanon Police Department had an agreement in place for their participation in the JVCTF that referenced the FBI’s participation, but the FBI did not sign the agreement. The Wilson County Sheriff’s Department and the FBI operated the Safe Streets task force.

The investigation found that some case files were incomplete or missing, including one involving bags of cocaine that were seized but could not be found.

The investigation also found that more than $25,000 in seized cash could not be accounted for – and almost $9,000 in seized cash was improperly deposited into the police department’s bank account instead of a joint account shared with the sheriff department.

Investigators also determined that vehicles seized by the JVCTF and awarded to Wilson County were not accounted for and disposed of properly.

The Wilson County deputy assigned to head Wilson County’s participation in the JVCTF and Safe Streets Task Force pled guilty to obstruction of official proceeding and was sentenced on April 27 to 18 years in prison.

“This is another case in which better use of accounting checks and balances – what auditors refer to as ‘internal controls’ – could have prevented problems,” Comptroller Justin P. Wilson said. “Good accounting and recordkeeping procedures are very important, particularly in cases like this in which money and seized assets are involved. I commend our auditors, as well as the investigators from the TBI and FBI, for their diligent work on this case.”

The audit, which was released today, can be viewed online at: http://www.comptroller.tn.gov/la/SpecialReports.asp

Categories
Press Releases

State: Audit of Davidson Co. Clerk Arriola Uncovers Corruption

Press release from Tennessee Comptroller of the Treasury; Jan. 26, 2012:

Investigation Finds Issues Regarding Operations of the Metro Nashville County Clerk’s Office

The Metropolitan Nashville Davidson County Office of the County Clerk repeatedly collected improper fees from citizens, made an improper payment from funds maintained by the office, and engaged in poor payroll record-keeping, an investigation by the state Comptroller’s office has revealed.

The investigation was conducted by the Comptroller’s Division of County Audit with assistance from the Tennessee Bureau of Investigation.

Auditors found that between Sept. 1, 2006 and June 26 of last year, the office performed nearly 3,000 marriage ceremonies for which a $40 fee was usually charged to the marrying couples.

Numerous interviews with office employees and couples indicate the fees charged were not optional, which appears to conflict with state law.

The fees were placed in envelopes and personally delivered to Davidson County Clerk John Arriola. Auditors estimate that almost $120,000 was collected during the time period under review.

The investigation found numerous personnel and payroll issues, including:

• Arriola hired his campaign treasurer, Leighton Bush, as his office outreach coordinator, but could not document the hours Bush actually worked for the office or outreach projects he completed

• Arriola contracted with David Currey in a non-competitive process and paid his firm more than $40,000 for consulting work at the same time Currey was renting property from Arriola

• Payroll records revealed 63 employees in the office were compensated for overtime hours they did not actually work

• Employees solicited campaign contributions from staff during regular business hours and on at least one occasion some employees were asked to leave work early to attend a political fundraiser held on Arriola’s behalf. The investigation also found that the clerk’s office failed to turn over computer fees to the county general fund as required by state law. More than $65,000 as of June 30, 2011, was on hand in the clerk’s fee and commission account.

All of the findings and recommendations have been forwarded to the Davidson County District Attorney General.

To view the investigative report online, go to: Davidson County Clerk Special Report

Categories
Press Releases

Mason Employee to Serve 90 days in Jail After Embezzling Nearly $100,000

Press Release from Comptroller Justin Wilson; Jan. 6 2011:

A former employee for the Town of Mason pleaded guilty this week in Tipton County Criminal Court to theft, fraud and misconduct charges.

Arnita Mitchell was indicted on several felony charges in 2009 after an investigation by the state Comptroller’s office uncovered an embezzlement scheme that lasted for nearly 30 months. State auditors were alerted to potential problems with the town’s finances when irregularities were discovered in its annual financial audit.

Upon further investigation by the Comptroller’s office, auditors discovered that Mitchell separately accounted for cash collections at city hall that were not included with the regular bank deposits she prepared. When questioned by state auditors, Mitchell admitted to taking several hundred dollars a day, two to three days per week, for 30 months. Her total theft was estimated at $96,961.

Mitchell pleaded guilty Wednesday to theft of property over $60,000, computer fraud over $60,000, forgery and official misconduct – all of which are felonies. She was ordered to serve 90 days in jail, pay restitution to the town and was placed on probation for eight years.

Categories
Featured News NewsTracker Tax and Budget

Comptroller: State Budget Audit Running Late Again

The annual report detailing exactly how much money Tennessee state government agencies have in the bank probably won’t be ready in time for Gov.-elect Bill Haslam’s first spending proposal, according to Comptroller Justin Wilson.

The new governor is charged with developing his 2011-12 budget less than two months after he takes office. But without the results of a yearly financial report, he and his staff will be making their spending projections based on less-than-certain 2010 budget numbers.

“I do not think (state budget writers) should rely on them being ready by the first of March,” Wilson told TNReport. “I’d certainly like to be able to do so, but I do not project that.”

The Comprehensive Annual Financial Report, otherwise known as the CAFR, is traditionally due on Dec. 31 for the budget year ending six months earlier. The document represents a head-to-toe review of state government finances.

Without the results of that report at the ready, lawmakers will have to make decisions based on fuzzy numbers that haven’t been audited, which can lead to problems tracking balances in state accounts.

This isn’t the first time the CAFR would be late. Officials put the full 2008-09 report to bed seven months behind schedule last year, forcing the legislature to approve the current year’s budget using unaudited numbers.

Lawmakers last year OK’d a budget without the CAFR — an exercise Sen. Andy Berke, D-Chattanooga, said he’d rather not repeat.

“Gov. Haslam is going to be faced with making a lot of important decisions very quickly,” said Berke, a high-ranking member of the Senate Democratic Caucus. “It’s trying to hit a moving target while you’re moving yourself. There’s no easy way to do it.”

Wilson wouldn’t cite any particular repercussions resulting from last year’s audits showing up tardy. “I cannot point to a higher interest rate on our bonds. To what extent it may have affected the federal government in giving grants, I don’t know,” Wilson said.

But the prospect of facing real-time fiscal unknowns and accounting ambiguities going into the new budget-crafting cycle is obviously less than ideal, he said.

Wilson’s office is also in charge of separately auditing the state’s use of federal funds. That review is due to the feds in March.

Wilson attributes the delays to problems in the government’s transition to the Edison accounting system, which kicked some sand into the state’s old-school bureaucratic bean-counting mechanisms.

“We believe that many of the problems have been resolved. You don’t know until you do it. You don’t know what’s in the box until you open it,” said Wilson.

The pressure will only increase on Haslam and his new administration going forward. The new governor will take office Jan. 15. He is currently assembling his administrative cabinet but has so far not begun piecing together a state budget that last year topped off at nearly $30 billion.

“Governor-elect Haslam and his team are following the state’s budget situation, and when they come into office they’ll be prepared to take on the state’s budget challenges with the best information available,” said transition team spokesman David Smith.

Wilson said he expects officials to finish the CAFR report “much earlier” than last year’s August completion. But the comptroller stopped short of saying when he expected the financial reviews would be done.

“We certainly will not meet our Dec. 31 goal,” he said.

Categories
Press Releases

Comptroller: Marion County Election Office Ordered Fraudulent Payments

State of Tennessee Press Release; Aug. 26, 2010:

Marion County’s former administrator of elections ordered more than 100 warrants issued on behalf of individuals who had not performed work for the local election office, an investigation by the Comptroller’s Division of County Audit has concluded.

The investigation was conducted with the Tennessee Bureau of Investigation at the request of the local district attorney’s office.

Between July 1, 2003 and March 31, 2010, investigators discovered that Holly Henegar, who at the time was Marion County’s administrator of elections, ordered 107 warrants issued to 34 individuals. The warrants were to pay for elections-related work done by those individuals, including several young children.

Investigators concluded those individuals did not perform the work for which they were being paid and instead the proceeds from the checks, totaling $27,170.93, were being funneled to Henegar’s husband, Billy Joe Henegar.

Investigators suspect Billy Joe Henegar, who has been receiving disability compensation since 1991, apparently sought the payments through other parties to protect his disability status and to avoid reporting the extra income to Social Security or the Internal Revenue Service.

The Tennessee Department of State’s Division of Elections conducted a separate inquiry into the operations of the Election Office earlier this year. As a result of that investigation, the State Election Commission scheduled a hearing to discuss whether Holly Henegar should be decertified as an election administrator. Holly Henegar resigned from her post last April, prior to the hearing.

The Comptroller’s investigation found several other deficiencies in the manner in which the Marion County Election Office requested and received payments. For example, the office submitted requests for payment to the County Mayor’s office that did not include sufficient documentation about the reasons for the payment, dates and hours worked by employees and certification by both the administrator of elections and the supervisors at polling precincts.

Also, the investigation found that Holly Henegar improperly appointed election officials, including city and county employees, when those appointments should have been made by the Marion County Election Commission.

And some county election commissioners were paid for meetings they had not attended.

Gary Reames, who replaced Holly Henegar as administrator of elections, vowed to take the corrective steps recommended by the auditors.

“It is unacceptable to have any type of fraud, waste or abuse at any level of government,” Comptroller Justin P. Wilson said. “This type of fraud was particularly egregious because it involved using small children as a smokescreen to conceal improper payments. The individuals responsible for this should be ashamed of the manner in which they have abused the public trust.”

“I want to compliment the efforts of all parties involved in investigating this matter,” said Jim Arnette, director of the Comptroller’s Division of County Audit. “Our staff did an excellent job of documenting the misuse of funds by the Marion County Election Office. The Comptroller’s office is committed to eliminating fraud, waste and abuse of public funds.”

To view the report online, go to: http://www.comptroller1.state.tn.us/repository/CA/2010/Marion%20Co.%20Election%20Office.pdf