Tennessee comptroller Justin P. Wilson has found three significant areas of concern in his latest Claiborne County Financial Audit Report, for the year ending on June 30 of last year.

The first finding concerns the payout of funds without documented approval by the school board. The monies were paid to Connie Holdway, the former director of schools, and to retiring teachers.

“…the director of schools received a bonus payment of $7,000. As authorization for the payment, the Finance Office provided our auditors with a letter signed by the chairperson of the Board of Education, which stated that the board had met on June 5, 2017, and unanimously approved this payment as a bonus for services rendered. However, no board minutes were produced documenting that the meeting occurred, or what may have been approved at that meeting. This payout was reflected in the teachers’ salary line-item in the General Purpose School Fund, rather than the line-item used for the director of schools’ salary.

“…six teachers received payments in addition to their regular salary, totaling $42,158. As authorization for the payments, the Finance Office provided our auditors with an email from the director of schools stating that the Board of Education had made the decision to make a one-time retirement benefit. According to the email, teachers with 30-plus years of experience and a minimum of 20 years in Claiborne County who retired by June 30, 2017, were offered $55 per day for unused sick and personal days. A budget amendment was approved by the Board of Education and county commission to appropriate funds for these payouts; however, management could not provide evidence in the minutes of the Board of Education that specified the terms of the policy, or that the board approved the terms of the policy,” reads the audit report, in part.

In his recommendation, Wilson says all documentation of bonuses and retirement incentives should be in the school board minutes. He also recommends that the school board decide whether these payouts were appropriate. If not, the funds should be recovered, he states in the audit.

Dr. Joseph Miller, the current director of schools, stated in his audit response that all future payouts will be properly approved by the school board and duly recorded in the minutes.

During its latest board meeting, the BOE decided not to pursue litigation to recover the funds. The decision was apparently due to the cost of going to court.

The board amended the minutes to show approval of the payouts.

Wilson found the Claiborne County Sheriff’s Office was in noncompliance for allowing accrued leave balances to exceed those allowable by the county personnel policy.

Apparently, some employees exceeded the maximum 100 hours.

“These deficiencies can be attributed to the failure of management to adequately monitor employees’ leave balances, management’s failure to correct the deficiencies in prior-year audit reports, and the failure to implement their corrective action plan. Allowing employees to accrue excess leave balances may result in excess employee compensation,” states the report.

Claiborne Sheriff David Ray responded in the audit that his department is continuing its efforts to decrease the accrued leave balances.

Wilson also found there was no adequate segregation of duties within the offices of county clerk, the register of deeds and the sheriff’s department.

“Officials and employees responsible for maintaining accounting records were also involved in receipting, depositing, and/or disbursing funds. Sound business practices dictate that internal controls be designed to provide reasonable assurance of the reliability of financial reporting and of the effectiveness and efficiency of operations. This lack of segregation of duties is the result of management’s decisions based on the availability of financial resources and is a significant deficiency in internal controls that increases the risk of unauthorized transactions, management’s failure to correct the finding noted in the prior-year audit report, and management’s failure to implement their corrective action plan,” states the audit report, in part.

Sheriff David Ray, County Clerk Evelyn Hill and Kimberly Reece, county register of deeds, concurred with the findings. All three stated in their responses that they will implement controls to segregate duties.

On page 19 of the report, the general net revenues block lists totals from tax collections. As of June 30, Claiborne County had collected a net $1,479,256 in wheel tax money. During the same time frame, the county collected $59,117 in net wholesale beer taxes.

Net amounts differ from total amounts for a number of reasons, according to language in the audit report. Capital assets used in governmental activities are not financial resources and are not reported in the governmental funds.

Sometimes, liabilities are not due and payable in the current period.

Other funds are ‘deferred’ due to the time frames involved in the actual receipt of the monies.