An independent accountant's examination by the auditing firm of Blackburn, Childers and Steagall listed several findings, which were reported to the Board of Directors in January. These findings included the need for a formal purchasing policy.
The findings included the lack of supporting documents for 14 of the 60 financial transactions tested. Six of the 14 totaled only $150 and were for meals or parking while traveling. Three of the items were for the Fourth of July Parade expenditures, when Carter County Tomorrow served as the flow through agency for money spent on the parade by the city of Elizabethton. The other four were for automatic bill payments or payments by phone.
The auditor also recommended the agency request from its bank and maintain images of its canceled checks and regularly review the images for mistakes.
Another finding was that some of the expenditures in the general ledger would probably have been more appropriately coded differently.
The examination came as a result of discussions by the Board of Directors on whether an audit should be performed. Tom Anderson, President of Carter County Tomorrow, said it was quickly decided the organization's revenues were too small to conduct a full audit.
Anderson said his organization had incoming revenue of $133,000 last year from its three member organizations: the Carter County government, the city of Elizabethton and the Elizabethton Electric Department. Anderson said an audit could cost between $10,000 and $40,000.
The organization does oversee other agencies, including the Elizabethton/Carter County Chamber of Commerce, the Tourism Council and serves as the landlord for the Workforce Development Complex.
Instead of spending its limited resources on an audit, the Board agreed to have Karen McMurray of Blackburn, Childers and Steagall sample 60 cash disbursements. McMurray conducted the examination and reported her finding during the board's January meeting.
In her findings, McMurray noted that since there was no formal procedures for conducting the agency had developed informal procedures, these procedures were not always followed. She recommended that formal purchasing policies and procedures be established and monitored in order to reduce the risk of error or abuse.
She said five of the 60 samples related to capitalized expenses and all five were improperly expensed rather than capitalized, or improperly capitalized rather than expensed. She recommended the organization establish a policy to establish a capitalization threshold and depreciate capitalized assets.
McMurray's examinations included one check which was written for "cash." Upon examining further, she was told the money was used as a change fund for an event. McMurray said there was no record of the cash be redeposited or reconciled. She said it appears the funds were redeposited with the sales from the event.
One of the sampled expenditures was listed as a "bonus to an employee." Upon inquiry, she found a $50 bonus went to a contract worker rather than an employee. She recommended that additional pay to workers be approved by the board.
McMuray said she also found that four of the 60 disbursements were not typical of the organization specified. She recommended that disbursements must be clearly in line with the missions of the organizations.
The board continued to discuss the implementation of a formal financial policy and procedures during its February meeting. Carter County Mayor Leon Humphrey has recommended adopting the county's policy. Anderson has said the board is also considering a policy which is written for the needs of a small non profit organization.