County changes policy regarding funding outside agencies

Published 4:59 pm Wednesday, May 3, 2017

Members of the Carter County Financial Management Committee approved a change to the policy governing the county’s funding allocations to outside agencies.

Under the county’s previous policy, any outside agency allocated funds from the county was required to submit a full audit report to receive the donation regardless of how large or small the county’s contribution is. The policy requiring an audit was adopted by the county around a year-and-a-half ago as a way to bring structure to the outside agency funding process and allow the county to ensure the agency is properly managing the allocated funds.

The county’s policy became the subject of debate recently when some County Commissioners expressed concern that the Shepherd’s Inn would have to spend an estimated $7,000 on an audit to receive a $12,000 donation from the county.

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During the Financial Management Committee’s meeting in April, the group discussed the policy but ultimately decided by a split vote of 4-3 to leave the policy unchanged.

Financial Management Committee Chairman Ray Lyons put the subject of changing the policy back on the agenda for the group’s May meeting after speaking with Finance Director Christa Byrd and County Attorney Josh Hardin regarding an idea he had to change the policy. Ray’s proposal was to set a donation cap that would allow the county to require an audit from agencies receiving an allocation above a certain amount while allowing the agencies receiving a smaller donation to submit a less formal form of financial reporting.

According to Hardin, the state allows non-profits to submit a copy of their financial statements, typically the agency’s tax forms, along with a letter from the Chief Financial Officer in lieu of a formal audit. The state does not have an absolute requirement for non-profits to submit audits, Hardin said.

“The county can put strings on this donation. We can require a full-blown audit,” Hardin told the Committee Wednesday morning. “State law does not require one. We can be more stringent, or we can relax it.”

Hardin said he felt the funding level proposal by Ray made more sense than an arbitrary policy where the county would require audits from certain agencies but not others.

“Legally I don’t have an issue with it,” Hardin said.

Carter County Mayor Leon Humphrey, who voiced his opposition to changing the policy during the group’s April meeting, once again questioned the need for the change.

“We’ve been operating all these years with no complaint. Why would we now change what has worked for us for all these years,” Humphrey said.

Humphrey said The Shepherd’s Inn is the only outside agency that has ever voiced a problem with the county’s decision to require an audit.

Byrd informed the committee that while researching the issue, her office discovered something that could lead to a potential problem if the county’s policy is not changed.

The county’s seven volunteer fire departments receive their funding from the county as outside agencies and have previously never been required to submit an audit, even after the policy was adopted.

“It was an oversight on the county’s part,” Byrd said.

If the policy is not changed, Byrd said her office would have to require the volunteer fire departments to submit full audits in order to receive funds from the county.

Byrd said while Ray had discussed with her setting the funding requirement for an audit at $50,000 she felt that number would still cause problems as the individual volunteer fire departments receive just over $50,000 from the county.

“My recommendation would be for $100,000 if someone were to make a motion,” Byrd said.

Humphrey said he had not been aware of the issue regarding the volunteer fire departments, and he wanted to make sure the county was in compliance with its own policies. He then made a motion to set a funding threshold of $100,000 to require a full audit while agencies receiving less than that amount can submit the financial statements and letter which complies with state law.

The motion was seconded by Commissioner Bobbie Gouge-Dietz and passed on a vote of 6-1. Commissioner Charles Von Cannon cast the sole dissenting vote stating “I don’t know what the executive director makes, so I vote no.”