A bright light was shined on the First Tennessee Human Resource Agency last month, including its methods used to complete work on a $1 million project and its auditing procedures and findings, which revealed room for improvement.
Since that time, the agency’s former auditing firm has refused to comment on its association with FTHRA’s former and current executive director, Dale Fair and Jason Cody, respectively. United Way of Greater Kingsport has asked for a copy of last month’s story and continues to review the information to see if there is a potential conflict with their relationship.
And, the State Comptroller’s Office has reported the agency has not been rated a “low-risk” auditee for at least the last four years — a statement in direct conflict with information provided to the Johnson City Press by audits and administrators.
Neither Fair nor Cody disputed the fact during an interview that three required audits for fiscal years 2008, 2009 and 2010 were all completed within an eight-month period from November 22, 2010, to July 31, 2011. The 2011 audit is dated March 16, 2012.
Near the end of all FTHRA annual audits, accounting firms state whether it considers the entity to be a “low-risk” auditee. In years 2008, 2009, 2010, that is noted. However, the 2011 audit ends with this statement: “The agency was determined to ‘not’ be a low-risk auditee.”
“That’s standard,” Fair said last month of the auditor’s notation. “It doesn’t mean you’re a risk, it means you’re more complicated. There’s a high emphasis on detailed audits. It didn’t used to be like that. We had to ask the State Comptrollers Office for a little more time (for the 2008 audit) because their office was in flux, and we were changing over (to another auditor) in 2009. It’s not always what you want to do, but some things are out of your control. We don’t drive their schedule.”
Near the end of June, the Press contacted Barry Wright, a partner with Rodefer Moss & Co., the Greeneville auditing firm that wrapped up the agency’s 2008 audit but no longer serviced FTHRA after that year. When asked if there had been any complications with the agency’s administrators, Wright refused to comment.
However, he did add that, “There is a lot to talk about.”
The Press also asked for some clarification from the State Comptroller’s Office regarding what changes may occur should an agency be deemed “not” to be a low-risk auditee.
This answer from Blake Fontenay, communications director for the state’s comptroller, treasurer and secretary of state, flies in the face of the auditors’ assessments: “Based upon review of the financial statements located on the Comptroller’s web site, the First Tennessee Human Resource Agency has not qualified as a low-risk auditee for at least the past four consecutive years.”
Low-risk auditees are eligible for reduced audit coverage, Fontaney added.
Meanwhile, the United Way of Greater Kingsport requested a copy of the original article.
“It was brought to my attention that our United Way may wish to familiarize ourselves with the situation,” Joe F. Fleming Jr., the organization’s finance director wrote in an email.
Fleming wrote in a recent email that, “We are still evaluating the situation and how our program funding to their organization is impacted. As a layperson, I find it hard to believe that the organization and board did not see the potential conflict in the situation that you described in the article. We are not ignoring, but rather reviewing.”
Johnson City’s Blackburn Childers & Steagall audit of FTHRA’s 2011 finances states “Five significant deficiencies in internal control were disclosed in the audit of the financial statements, one of which was considered a material weakness.”
A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility a material misstatement of the agency’s financial statements will not be prevented, or detected and corrected on a timely basis.
Meanwhile, a significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
On Friday, about 45 minutes following the first of two attempts to reach Cody, which included a message and a general description of information being sought, FTHRA Communications Director Stephanie Walker contacted a Press reporter who was not involved with last month’s report.
Walker told the reporter she had heard another story was in the works and inquired about its contents. This story had not yet been written.
Blackburn Childers & Steagall, which took over in 2009, writes in its FTHRA audit that “This report is intended solely for the information and use of the management, the Board of Directors, others within the agency, federal awarding agencies and pass-through entities, and is not intended to be used and should not be used by anyone other than these specific parties.”
That’s not the case.
This information belongs to the public. Any citizen wishing to review this material cannot be denied access. State law says human resource agencies are subdivisions of the state, much like cities and counties and should be subject to the same level of financial auditing and scrutiny as any other subdivision of state government.
The audits are available on the Tennessee Comptroller of the Treasury Department of Audit website at www.comptroller.tn.gov/audit/.