Mumpower lectures county officials on finances

Published 2:58 pm Friday, April 5, 2024

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By Buzz Trexler

Star Correspondent

Carter County has the “worst financial management of any county” in Tennessee that is operating under a centralized financial management system recommended as a best practice by the Tennessee Department of the Treasury.

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That was the assessment given by Tennessee Comptroller of the Treasury Jason Mumpower on Thursday night as he lectured the Carter County Commission Financial Management Committee about fiscal responsibility.


An annual audit from the Tennessee Comptroller of the Treasury for the fiscal year ending June 30, 2023, was released in March and revealed “material weaknesses, significant deficiencies, and noncompliance within the Office of the Finance Director.” There were 10 findings, the state said, six of which were a repeat of the findings found in an audit of the fiscal year 2022.


The comptroller said Carter County Finance Director Carolyn Watson bears a great amount of responsibility for the issues uncovered in the audit. “But I am here tonight in particular because this financial management committee bears great responsibility for these issues as well,” he said.


The County Commission depends upon information provided by the Financial Management Committee, and the committee must be confident that commissioners are receiving good financial information every month to make good decisions, Mumpower said. “When we see that your financial statements were off by more than $11 million last year, out of a $92 million budget, we certainly cannot feel confident that you’re getting good information.”


“The thing that scares me the most about what’s happening here in Carter County is I don’t see any recognition that there’s a problem,” Mumpower said, though he did point to County Mayor Patty Woodby as having “demonstrated great concern and leadership in working to fix this issue.”


The county’s financial health is good, Mumpower said. “You do have a healthy fund balance. Your debt is manageable. That’s where the good news ends. Your financial management is very poor,” he said. “It has been poor for the past two years and it remains poor today.”


The state comptroller commended the county for choosing to operate under the 1981 Financial Management Act, whereby the county establishes a department of finance – supervised by a director of finance – to administer all funds handled by the county trustee. That department is subject to the policies and regulations adopted by a county financial management committee. Mumpower called that centralized form of accounting a best practice that is recommended for every county in the state.


Of the 24 other counties in the state that operate under the 1981 legislation, there was an average of 1.8 findings in their fiscal year 2023 audit, Mumpower said, compared to Carter County’s 10 findings. “It is not hyperbole. It is not exaggeration. It is, in fact, documentable that Carter County demonstrates the worst financial management of any county operating under the ’81 act,” he said.


‘Very basic accounting problems’


Still, Mumpower told the committee the “scariest part” is that the problems uncovered by the audits “are ground level, very basic accounting problems.” The state auditing team blew past the 1,000 hours that was budgeted for the process, spending 1,644 hours on Carter County’s audit.


The four findings that are most concerning to the state are those related to the maintenance of the county’s accounting records, deficiencies in budget operations, maintenance of capital asset records, and “the excessive number of journal entries,” the latter of which are entered into records to correct mistakes.


The county’s finance office is responsible for managing 17 separate funds, Mumpower said, of which 12 were misstated by more than $11 million – a feat the comptroller said had never been seen by Assistant Director of Financial and Compliance Audits Bryan Burklin in 40 years of state service.


Another issue of concern noted by Mumpower were 986 journal entries for fiscal year 2023, which he called more than excessive. “It clearly means there were a lot of errors that needed to be fixed and journal entries were being used for unintended purposes,” the comptroller said, adding that thus far in the current fiscal year there are already more than 700 journal entries – more than Washington and Sullivan counties combined.


Prior to fiscal year 2022, state audits of Carter County did not report any findings related to journal entries, the maintenance of accounting records, or capital assets records, Mumpower said, but they began in 2022 and continue to exist.


No confidence in county’s accounting


“It is not a stretch to say that the citizens of Carter County are paying taxes that are too high today because you can’t keep up with how much money you have,” Mumpower said. “It is not a stretch to say that your budget is going to be in question this year when it comes to my office for approval because we don’t have confidence in your basic accounting in Carter County.”


The comptroller said his office is willing to help and pointed to resources provided by The University of Tennessee County Technical Advisory Service (CTAS).


“Your finance office, at a minimum, needs intensive training in basic accounting,” Mumpower said. “I certainly hope that I won’t have to be back here addressing this particular issue. I would love to be back saying how much better things are in Carter County.”


Mumpower gave an opportunity for questions from the committee, but none was offered. Woodby did ask what would happen if there were a third poor audit. The comptroller made no mention of state sanctions, but spoke about the need for citizens to have confidence in their local government.


Afterward when speaking to reporters, Mumpower was asked whether any county officials had reached out to his office after the audit was released in March.


“The thing that scares me the most is even after we released the second audit in a row with 10 or more findings, is the silence we heard, except from the mayor,” Mumpower said. “Mayor Woodby stood up and said, ‘I recognize there’s a problem. Let’s fix it.’


“But from the commission, and the commissioners on this financial management committee, I think yet they have a failure to demonstrate that they recognize the gravity of this situation,” he said.