Audit's 5 findings explained by mayor


Posted 12/21/17

Bradley County got good news as it received a “clean opinion” for its Fiscal Year 2017 audit.County Mayor D. Gary Davis took particular pride in noting the county’s net position — the amount …

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Audit's 5 findings explained by mayor


Bradley County got good news as it received a “clean opinion” for its Fiscal Year 2017 audit.

County Mayor D. Gary Davis took particular pride in noting the county’s net position — the amount the government’s primary activities exceeded its liabilities — was $44,863,192, is an increase of $541,865 over last year.

“That is the most important thing in an audit, assuming there is nothing bad,” Davis said. “There were no instances of non-compliance.”

“That number represents governments' ‘bottom-line,’” he said. “The government is not here to make money, but you have to be on the black side of the ledger.”

He noted the fund balance is also in a good position.

“The General Fund balance ended up being around 21 percent,” Davis said. “The goal is to get to 25 percent and needs to be there because of cash flow issues.”

That cash flow issue is due to the lack of revenue, usually between July and December, when there is no property tax revenue coming in to the county coffers.

“The fire department fund was so low a few years ago, we had to borrow for cash flow issues,” he added. “This past year we had to borrow a small amount, but we’ve improved it a lot. I hope by next year we won’t have to do it for that department. Their fund balance came up dramatically this year.”

He noted the county general fund has not had to make such loan in around 20 years.

However, the bugs of new technology did not sit well with auditors.

The auditors issued five findings: the General Fund required audit adjustments for proper financial statement presentation; the general ledger cash account was not properly reconciled with the County Trustee reports in the General ledger fund; the General Fund general ledger payroll liability accounts were not reconciled; the office failed to make timely payments to the Tennessee Consolidated Retirement System resulting in assessed penalties totaling $11,929; and duties were not segregated adequately.

Davis said the first three of those were tied to problems with some new software and were quickly corrected once discovered — partially by three of the auditors who were enlisted to help solve the problem.

“I do wonder why the auditors, since there was a common reason for the problems they cited in those three findings, chose to make it three findings instead of one,” Davis said. “And, they were all quickly corrected almost immediately.

“At the end of fiscal year 2016, the Bradley County Finance Department upgraded its Local Government Software used for accounting and payroll services,” Davis said. “Due to an unforeseen malfunction in the software as a result of the upgrade, sub-funds did not properly close and did not roll into the General Fund as required at the end of the year.”

He said a manual reconciliation was performed allowing the county to balance its financial statements despite the software issues.

“The finance director was having to manually reconcile the month and at some point — working with the trustee, working with the Local Government software company — along with three auditors worked on it and figured it out and hopefully got it corrected,” Davis explained.

Auditors noted these were not repeat findings for the county and the problems were addressed and correctly immediately.

“They were definitely addressed immediately,” Davis said.

The payments to the state retirement system stemmed from the county having decided to use a new hybrid plan for all county employees hired after Oct. 1, 2016.

“Local government software used by the county for payroll was not set up correctly for the employee deductions to report correctly in the payroll system,” Davis said. “That caused issues in getting the retirement information to upload into the retirement system for the initial month of the retirement plan change,” he added. “That caused the county’s payment to be two days late and caused the penalties to be charged.”

“They got it figured out in a day or two and no other payments have been late,” Davis said.

Concerning the adequately segregated duties, Davis said his office has run well with the same number of employees for years.

“I have been here for 19 years and my office has the same number of employees it has had for years with three people in the Finance office doing the same jobs they have done for many, many years and I will have three next year,” Davis said. “I do wonder why it wasn’t a finding last year, or the year before, or the year before that. It hasn’t been for the last 15 years, I can tell you that.”

He noted the Finance department’s volume of activity included 94,000 general ledger transactions; 33,500 invoices keyed; 28,000 warrants written; and 19,500 payroll checks and direct deposits.

“There are three people in Finance and two people in Human Relations,” Davis said. “That’s a lot of transactions and they do a great job. We have won budget and audit awards multiple times.”

The mayor noted the findings are always listed at the front of the 300-plus page document, with the correction action plan located near the back.

“Most people never make it all the way to page 293,” he said. “That is a way to put the negative up front, even when it has already been corrected. That corrective action plan explains what has been done and gives the date when the problem was addressed."

Davis said he always notes any findings to be “opportunities for improvement.”

“The bottom line is there were five findings and four of the five were addressed immediately and before the audit ever came out,” he said. “The segregation of duties is a finding they will stick on two or three departments every year, and I guess it was just my turn this year. But, we will work at doing even better there.”


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