Tuesday, February 25, 2014
Lawrence County Audit Stands Out With Few Findings
Results of an audit of the annual financial report of Lawrence County Government for the 2012-13 fiscal year show that the county is in sound financial shape, with only a few minor findings identified.
Audit results have been released through the Tennessee Comptroller’s office. The document, relating to the fiscal year that ended on June 30, 2013, identifies only four findings.
Those findings as well as any recommendations, management responses, and auditor’s notes are as follows:
*Offices of County Executive and Director of Accounts and Budgets –
Finding: Some purchase orders were issued after purchases were made.
Recommendation: To strengthen internal controls over purchasing procedures and to document purchasing commitments, the office should issue orders for applicable purchases before purchases are made.
Management’s Response: Purchase orders are issued as departments make requests and the funds are available. It is not known upon issuance of the purchase order if a department has made a purchase prior to issuance of the purchase order. It is only determined once the invoice comes in and is compared to the purchase order. To strengthen internal controls over purchasing procedures, a new section will be added to purchase requisition where the department has to sign off that a purchase has not been made prior to the request.
In the event a purchase order is issued after a purchase has been made and is discovered during the invoice process, the purchase order will be liquidated and the department will be asked to provide an explanation of why a purchase was made prior to requesting a purchase order. The purchasing agent will send a memo out reminding all departments of purchasing procedures.”
*Office of Director of Schools –
Finding: Expenditures exceeded appropriations.
Recommendation: Expenditures should be held within appropriations approved by the County Commission.
*Office of Circuit, General Sessions, and Juvenile Courts Clerk –
Finding: Execution docket trial balances were not prepared for Circuit, General Sessions and Juvenile Courts.
Recommendation: Execution docket cause balances should be prepared and reconciled with cash journal accounts for Circuit, General Sessions, and Juvenile Courts as required by state statutes. To further comply with state statutes, the clerk should report and pay to the state Treasurer’s Office any unclaimed funds held for more than one year.
*Office of Sheriff –
Finding: Some funds were not deposited within three days of collection.
Recommendation: The sheriff should ensure that all funds are deposited with the County Trustee within three days of collection as required by state statute.
Management’s Response:
The sheriff’s office understands that there were times during the year in which collected funds were not deposited within three business days. However, the only time this happened was when the person who collects all of the money and receipts it and another person who logs each receipt into the department’s cash journal and makes the deposit were sick and off from work for multiple days. The prepared deposit is taken to the bank by either the sheriff, chief, or captain for deposit.
In the past, there have been no designated backups for either of the two people noted above. This is due to the fact that two years ago, auditors informed the department that all duties related to finances must be segregated and that we needed to limit the amount of people handling the department’s finances. Therefore, when either of these two people is off for multiple days and money has been collected during the said time, there have been occasions where the three-day threshold has been passed.
Auditor’s comment – Office procedures that involve segregation of duties are not limited only to specific persons. Provisions should be made for other designated persons to fill in when absences occur.
Director of Accounts and Budgets Teresa Purcell said that overall auditors found few problems. She explained, “The audit was issued with an unmodified audit opinion (clean opinion) and stands out among its peers, with only 4 findings. Lewis County had 22 findings, Wayne 30, Hickman 11, Giles 3, Grundy 21, and McNairy 17, just to name a few.
This is attributable, in part, to the county conforming to the 1957 Fiscal Control Acts, which govern accounting, budgeting, and purchasing practices for all departments, excluding schools.” Purcell explained that the act provides a provision for the exclusion of the School Department, and that some years ago county leaders opted to exclude schools. She said that if the schools were re-incorporated the county’s system would be completely centralized.
Auditors noted, “The School Department is excluded from (the 1957 Fiscal Control Acts) in Lawrence County…Sound business practices dictate that establishing a central system would significantly improve internal controls…The absence of a central system…has been a management decision by the County Commission resulting in decentralization and some duplication of effort. We recommend the adoption of the County Financial Management System of 1981 or a private act, which would provide for a central system...”
Purcell pointed out that the county established an Audit Committee in 2011 to provide independent review and oversight of the county’s financial reporting processes and the county’s internal controls, a review of the external auditor’s report and follow up on management’s corrective action, and compliance with laws, regulations, and ethics.
Having an audit committee, she said, is recommended by the State Comptroller’s office as a “best practice” and significantly improves the accountability and quality of services provided to the citizens of Lawrence County.
Purcell explained that the County operates under a $75 million dollar budget. The budget incorporates twelve funds that provide services throughout the county. These funds include general administration, public safety, solid waste, industrial development, public works, debt service, capital projects, schools, and homeland security. “These are all services vital to the citizens of Lawrence County,” she said.
Purcell said that as far as the county’s debt, “It’s in great shape, with an A-1 rating from Moody’s Investors Service. The county retires approximately $4,000,000 in debt annually, which continues to improve the County’s financial position.”
State Senator Joey Hensley commended county leaders saying, “It’s a very good audit which shows that the county is fiscally responsible and doing what they are supposed to do. Lawrence County is a big county with a large school system where a lot of money exchanges hands. I believe that all of the county leaders are to be commended.”
State Representative Barry Doss also commented on the audit, saying, “I would like to commend all the department heads and public officials for a job well done.”
You may view the audit in its entirety online at: http://www.comptroller.tn.gov/la/.
