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Hawkins creates Audit Committee on threat of losing grant eligibility

March 2nd, 2014 1:29 pm by Jeff Bobo

Hawkins creates Audit Committee on threat of losing grant eligibility

ROGERSVILLE — A new Hawkins County Audit Committee approved last Monday night will begin reviewing county audits in 2015, although it would have had quite a bit to talk about over the past two years related to negative school and county findings.

From failure to pay federal income tax, to state bidding violations, conflicts of interest and outright theft, apparently the state determined that Hawkins County could use another fiscal safeguard.

On each of the past four Hawkins County audits, the state comptroller’s office has recommended forming an audit committee, but the county commission took no action

In a statewide move, this year the county’s “Three Star” program status is placed in jeopardy if it doesn’t create an audit committee.

The county commission approved the committee 19-0.

Rogersville Chamber of Commerce Director Nancy Barker explained to the commission that the Three Star program, with which Hawkins County has been involved for 33 years, makes the county eligible for Community Development Block Grants (CDBG) and “FastTrack” industrial development grants.

“They can’t make you (create an audit committee), but they can take our grant money away,” Barker said. “That’s probably the biggest incentive we’ve got. Our CDBGs are what we use for all our infrastructure grants, our industrial grants, our substandard housing (repair grants), our fire departments get money from that, so it touches just about everything.”

Barker added, “Seventy-two counties have this in place. We’re among 22 that must have it in place by Feb. 28. If not, we won’t be eligible for any grants.”

Among the negative findings on Hawkins County’s most recent audit for the 2012-13 fiscal year were:

• County school payroll taxes weren’t reported in a timely fashion to the Internal Revenue Service, resulting in interest and penalties totaling $166,886.

• Three full-time school maintenance employees who were also regular school bus drivers were overpaid 30 minutes a day while those duties overlapped for an overall total of $4,478.

• School board members Debbie Shedden and Mike Williams didn’t disclose potential conflicts of interest when the school board made purchases of $33,613 and $15,558 from their employers.

• The school maintenance department purchased a used truck for $12,500 and a used van for $11,498.

• Four separate purchase orders were issued for these vehicles in July and August of 2012, and four separate checks were written for payments in August 2012 to the same dealership apparently in an attempt to circumvent the county’s bid requirements.

Among Hawkins County’s negative audit findings for the 2011-12 fiscal year were:

• The Solid Waste Department reported the theft of approximately $600 worth of scrap metal. An employee was charged with three counts of burglary and theft and was later ordered to pay $60 in restitution.

• Again, the school maintenance department circumvented the county’s $10,000 bidding requirement by purchasing three used vehicles for $9,999.99 each without obtaining formal bids.

• Funds were stolen from the Joseph Rogers Primary School cafeteria, resulting in the cafeteria manager being charged with theft under $500 and receiving one year of probation.

During Monday’s meeting, Commissioner Hubert Neal asked why it had taken so long for Hawkins County to create an audit committee.

“I’ve been asking for three years that we do it,” Neal added.

Budget Committee Chairman Gary Hicks replied, “If you’ve been saying it for three years, you could have turned in a resolution at any time, Mr. Neal. ... As far as why we haven’t done it before, no one has brought it up as a resolution.”

Some commissioners questioned the proposed makeup of the Audit Committee. As stated in the resolution, the five-member committee would include three members of the commission’s Budget Committee and two people from the community, one of whom would preferably be a certified public accountant.

Commissioner John Metz noted that the resolution also states that the commission is establishing an “independent Audit Committee.”

Metz added, “It states ‘independent Audit Committee’ numerous times, and in the actual training manual that the state hands out, one of the most prevalent points is, it says a county Budget Committee may not serve in place of the Audit Committee. I realize all seven (Budget Committee) members are not on here, but three are.”

Commissioner Danny Alvis made a motion to give the Audit Committee the same traditional composition as other committees, which is seven members, one from each district.

Hicks noted that there is a Friday deadline for the commission to approve the committee. The state must first approve the resolution before the commission gives its final approval, so it wouldn’t be possible to send it back to Nashville and then vote on it again in time for the deadline.

County Mayor Melville Bailey noted that once the Feb. 28 deadline is met, the commission can “tweak” the resolution as it sees fit.

“You could put all 21 commissioners on it if you want to,” Bailey said. “I could care less, because everyone is privy to the audit. What we’re doing here is satisfying a requirement of the comptroller’s office.”

Alvis withdrew his motion so that the deadline wouldn’t be missed.

Barker noted, “You probably won’t even put the committee together until after the (August) election because you don’t even know who is going to be on the Budget Committee, who may get elected and who may not get elected.” 

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