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County Fails to Bid Out Jail Food Contract

Sequatchie County officials did not seek competitive bids for more than $110,000 in food for the jail, state auditors found, violating a state law that calls for bids on contracts worth less than a tenth of that amount.

Contracts worth $10,000 or more must be bid out, state law says, in an effort to get the best deal for taxpayers.

Auditors with the comptroller’s office also faulted the county executive’s office handling of budget matters, in their review of finances in the 2010 fiscal year. Among the complaints:

  • The budget approved by the County Commission conflicted with the budget submitted to the state comptroller.
  • County officials spent almost $95,000 more than they had available in the ambulance service fund.
  • Expenses exceeded appropriations by $50,000 in a major general fund category.
  • In certain funds the actual balances as of July 1, 2009, differed significantly from the numbers officials presented to the county commission — in the general fund the estimates were off by $381,000.

Auditors also found problems in the county’s capital asset records, and said the county staff do not have the skills necessary to produce financial statements that follow accepted accounting standards. These two findings had been noted for three or more years, auditors wrote, leading them to conclude that county officials are “either unwilling or unable to address the deficiencies.”

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NewsTracker Tax and Budget

Haywood Co. Running $1.4M Deficit

Haywood County is bleeding red ink to the tune of more than $1.4 million in its solid waste disposal fund at the end of the last fiscal year, after state auditors adjusted the books to reflect the almost $1.8 million it will cost to close the county’s landfill and monitor it for three decades.

The issue of landfill costs is one facing Jefferson, Hardeman and Cumberland counties.

Auditors with the state comptroller’s office also found that Haywood County officials’ spending had exceeded appropriations in the Civil Defense and Parks and Fair Boards funds, the latter by almost $28,000.

Auditors had to correct various general ledger balances and criticized the county for not moving on a prior recommendation to train a staff member in the proper preparation of financial statements. Both problems had been reported for three or more years, auditors said, suggesting the county “is either unwilling or unable to address the deficiencies.”

The county also did not have a system for accounting for road materials on certain projects, auditors noted.

TNReport follows and reports on newsworthy audits of local and state government. Here’s a sampling of our recent items:

Missing Cash Leads to Charges of Theft Against Morgan County Clerk, Feb. 15

County’s Finance Standards Faulted, Feb. 15

Troubles in East Ridge, Feb. 11

Jefferson Co. Busts Budgets By $70K, Feb. 10

Hardeman County Trash Fund $1.7M in the Red; Money Stolen from Commissary, Feb. 9

Fentress Forgeries, Feb. 2

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Missing Cash Leads to Charges of Theft Against Morgan County Clerk

An east Tennessee county clerk took money home instead of depositing it to the office’s bank account, state auditors have found.

The auditor’s investigation — which identified more than $54,600 in missing funds — led to Morgan County Clerk Carol J. Hamby being indicted for theft, official misconduct and violation of a state law that requires public funds to be deposited within three days of receipt.

The Knoxville News-Sentinel has been reporting on the indictment and state comptroller auditors’ findings.

Under pressure from the investigation, Hamby returned more than $47,000, though some $7,400 was still missing as of late December, according to the report.

In a paraphrased response included in the audit, Hamby said she would not comment in detail because of the pending legal action but said she strived for “transparent record keeping.”

I made wrong decisions that allowed me to be in this situation. I have worked my absolute best to insure (sic) the customers had great quality service. All money was submitted to the Tennessee Department of Revenue, the Tennessee Department of Safety, Tennessee Wildlife Resources Agency, and any other state agency.

I focused heavily on some areas of my office and not heavily enough in others. … There are times I thought with my heart and not my brain. We all learn with age and experience.

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Education NewsTracker Tax and Budget

County’s Finance Standards Faulted

Meigs County Schools had a more than $106,000 deficit in its federal projects fund at the end of the 2010 fiscal year, state auditors found, because its expenses had exceeded available funds.

In their review of county finances, auditors also faulted the Finance Department’s purchasing procedures. Auditors identified problems with the county’s handling of purchase orders, payment of invoices, payroll, state and federal grants and reimbursements for travel — “In some instances, different mileage reimbursement rates were paid to employees,” auditors with the state comptroller’s office said.

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Jefferson Co. Busts Budgets By $70K

Jefferson County officials spent $70,200 more than the county commission had appropriated, busting budgets from public works to welfare services during the 2010 fiscal year, state auditors found in an annual review of the county’s finances.

Auditors noted that another fund, the law library fund, had expenses and encumbrances of more than $8,100, even though the county commission had not adopted a budget for the fund.

No worries. County officials should have extra cash on hand after approving a 12-cent property tax hike last year.

“We need a little more money this year to make everything work,” County Commission Chairman Phillip Kindred said at the time of the August vote.

Kindred may want to revise his estimate upward, since auditors have determined the county had a $4.9 million deficit in the solid waste disposal fund at the end of 2010, an increase of more than $216,000 from the previous year. The deficit resulted from the whopping costs, also in the $4.9 million range, of closing a county landfill and maintaining it for 30 years afterward. It was a problem auditors had noted the previous year, leading them to conclude that “management is either unwilling or unable to address the deficiency.”

Auditors have run into similar landfill closure costs in Cumberland and Hardeman counties.

Auditors also faulted Jefferson County for poor recordkeeping in the county clerk’s office and, in the schools department, failure to account for federal stimulus funds separately from other county funds.

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Hardeman County Trash Fund $1.7m in the Red; Money Stolen from Commissary

Hardeman County‘s solid waste disposal fun had a deficit of almost $1.7 million at the end of the last fiscal year, state auditors found, largely because of the county’s estimated $2.3 million in costs associated with closing a landfill and monitoring it for 30 years, a problem auditors have documented elsewhere in the state.

Auditors also discovered $1,297 was missing from the sheriff’s department commissary fund, and in the course of the office’s inquiry, the commissary bookkeeper confessed to taking the money and was fired. According to the audit, the bookkeeper repaid the funds, but auditors noted weaknesses in documentation that, if fixed, could prevent future theft.

The county erred in not depositing certain contractor payments into an escrow account, auditors found, and the county mayor’s office spent more than the county commission had allotted for its drug control and general funds.

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Fentress Forgeries

The signatures on Fentress County time sheets for a secretary in the sheriff’s department were forged, a sheriff’s employee told state auditors, who determined that even though the secretary was earning full-time pay, her duties did not require that amount of time.

Auditors with the state comptroller’s office have referred the matter to the district attorney’s office.

The secretary was responsible for entering information into the state’s crime database, the Tennessee Incident Based Reporting System, the audit says.

Because she telecommuted, the sheriff told auditors he took paperwork to the secretary’s home. But the secretary, also interviewed by auditors, provided a conflicting report: She said she picked up the reports at the sheriff’s office on nights and weekends, and sometimes took a sheriff’s department computer home to work. She told auditors she had been working 40 hours per week.

The chief deputy, who was in charge of reviewing and signing time sheets, told auditors that the secretary’s time sheets were rarely among those given to him for approval. When auditors presented him with her time sheets for a period of about a year through Feb. 13, 2010, the chief deputy “verified that in 23 instances his signature had been forged,” the audit says. The secretary earned more than $19,000 over those 23 pay periods.

The chief deputy “did not know who was signing his name on her time sheets before they were sent to the payroll department,” the audit says. “Furthermore, the chief deputy stated he had not seen or talked with this secretary in several years, except at the most recent Christmas party.”

Auditors checked with Overton and Clay counties, which also enter reports into the crime database. Those counties spent 5 to 10 hours per week on the task — the same job for which the secretary was garnering full-time pay.

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NewsTracker Tax and Budget

Montgomery Co. Employees’ Health Insurance Fund Floundering

The health insurance fund for schools and county employees in Montgomery County had a more than $1.6 million deficit at the end of fiscal year 2010, state auditors found in an annual check of county finances.

The red ink stemmed from a spike in claims in April, though officials have worked to address the issue, management with the county and the Clarksville-Montgomery County School Department wrote in their response to the audit’s finding.

“Premiums were increase by 11.89 percent for the current fiscal year, and adjustments to the health plan were implemented, which appear to have adequately addressed the problem at this time,” management wrote in its response.

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NewsTracker Tax and Budget

Competitive Bidding Process Skirted by Benton Commission

Benton County circumvented the competitive bidding process when it entered into a $3.7 million, five-year contract for ambulance service with the Jackson-Madison County General Hospital District, state auditors found in a review of the county’s finances.

The county commission first rejected a lower bid before negotiating the deal with the hospital district, which included services beyond the scope of the original solicitation, auditors found. But the documentation from those 2009 discussions was so spotty it was unclear why.

“Purchases should be made from the vendor with the lowest price that meets bid specifications unless adequate documentation is on file supporting the decision to reject the lowest bid,” state comptroller’s office auditors wrote. County officials did not respond formally in the report, but “officials provided various reasons why the bids were rejected,” the audit says.

Auditors also criticized the parks and fair board, which entered into a lease agreement without county commission approval. The audit of fiscal year 2010 finances also found that the county was unable to produce financial statements in line with generally accepted accounting procedures and that spending exceeded appropriations by as much as $9,000 in a handful of budget categories.

TNReport has been keeping up with audits from the state comptroller’s office, including these recently posted reports:

County Not Tracking Road Material Use: Audit (Jan. 21)

Financial Disclosure Info Lacking on State Board of Education Members (Jan. 26)

Red Ink Runneth in Crossville (Jan. 28)

Moore County Officials Spent More Than They Had (Jan. 31)

Readers can peruse the original audit reports, linked from TNReport blog items and posted at the state comptroller’s website.

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News NewsTracker Tax and Budget

Moore County Officials Spent More Than They Had

Lynchburg-Moore County’s spending exceeded available funds in its general fund by $310,000 when state auditors conducted an annual review of the metro government’s finances.

Auditors also found that an SUV purchased for the Emergency Management Agency had not been competitively bid, even though its price of more than $23,000 was well above the $10,000 threshold requiring competitive bids in the county’s own purchasing procedures. In response, county officials said they had notified department directors of the requirement.

Metro Moore County did not have the ability to produce financial statements in line with generally accepting accounting procedures, the audit said. Comptroller’s office auditors also found that the county used its tax-exempt status for supplies, then gave them to a contractor using them for a park lighting project. State law requires contractors to pay sales tax on property furnished to them, and Moore County should fix the mistake in coordination with the state Department of Revenue, auditors wrote.