ERWIN — Despite five findings in Unicoi County's recently released annual financial audit completed by the Tennessee Comptroller of the Treasury, county Mayor Greg Lynch said he is pleased with the audit overall.
“There’s no real red flags that I think should cause anybody to be alarmed,” Lynch said. “Of course, the audit standards have been tightened over the last few years, but I feel comfortable with this audit. It shows us some areas that we’ll need to work on, and we’ll certainly do our best to make sure that those don’t happen again.”
The first finding noted in the audit, which pertains to the 2011-12 fiscal year that ended in June, was that auditors found the county and Unicoi County Sheriff’s Department failed to bid out perishable food commodities for the county jail and jail workhouse. The audit states that while perishable food commodities may be exempt from state law requirements that purchases exceeding $10,000 must be publicly bid out, it states the Unicoi County Commission had not formally approved this exemption.
Unicoi County Sheriff Mike Hensley responded to the finding in the audit report, stating that his department is now bidding out perishable food commodities for the jails.
The second finding dealt with accrued vacation leave balances that exceeded the maximum leave provided by the county in the office of the county’s Road Superintendent.
The audit report states that accrued leave time was maintained manually instead of through a computerized payroll system, as was recommended, and unused balances not calculated until the end of the fiscal year.
“During our review of employees’ accrued leave balances, we noted that several employees had accrued vacation leave balances that exceeded the five-day maximum balance established by the county’s personnel policy,” the audit report states. “This deficiency can be attributed to the failure of management to adequately monitor employees’ leave balances.”
The audit report states that duties were not segregated adequately in the county’s Office of Clerk and Master, a finding also noted in last year’s audit. Auditors recommended that duties in the office should be segregated to the extent possible using available resources.
“The official and employees responsible for maintaining accounting records were also involved in receipting, depositing, and/or disbursing funds,” the report said. “Accounting standards provide that internal controls be designed to provide reasonable assurance of the reliability of financial reporting and of the effectiveness and efficiency of operations.”
Auditors also noted deficiencies in the reporting of employee leave in the sheriff’s department. The report said numerous sheriff’s department employees had accrued vacation leave balances that exceeded the county’s five-day maximum balance. It further states sheriff’s department employees were allowed to accrue holiday leave, even though such leave was not addressed in the county’s personnel policy. The department submitted an annual report of employee leave to the county mayor’s office, but that employee leave was not reported on time sheets submitted to the mayor’s office for each pay period during the year.
In response to this finding, Hensley said in the report that since his appointment to the office of sheriff in March, he immediately stopped the “enormous amount of leave” and started a plan for employees to use past vacation and overtime that had been previously accrued. Other changes implemented by Hensley included moving staff from 12-hour shifts to eight-hour shifts and requiring employees to use vacation time within the fiscal year.
The final finding noted was that the county Assessor of Property’s office failed to prorate new construction or improvements. The audit report states that under state law, for the year in which an improvement or construction is completed, the assessment or increase in assessment shall be prorated for the portion of the year following the date of its completion.
“This deficiency can be attributed to the lack of management oversight resulting in new construction not being properly assessed and the potential loss of county tax revenue,” the report said, with auditors recommending that the office pick up and prorate new construction and improvements as required by state statute.
In her response in the report, Assessor of Property Patsy Bennett stated that her office is not on the state’s computer system, which is set up to do the proration by computer.
“The system we have doesn’t have an option for proration, so when we pick up the new construction, we try to use a manual depreciation factor to adjust for the proration and postpone putting the whole value on the home until the next year,” Bennett’s response stated.
In their comments to this response, auditors stated that the assessor of property was unable to provide any records demonstrating that “proration procedure of value was being followed as required by state statute. This issue has been addressed with the assessor in the past and will be monitored in the future.”
Auditors also recommended best practices the county should consider implementing, including the adoption of a central system of accounting, budgeting and purchasing, and the establishment of a county audit committee.