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By Buzz Trexler

Star Correspondent

Carter County Financial Management Committee members during a called meeting Thursday night recommended contacting an outside accounting firm about a contract to assist with resolving audit and other financial control issues.

During the meeting, Finance Director Carolyn Watson outlined recommendations to improve upon two years of poor state audit results. Overall, Watson and the committee agreed that the county needs more clarification from the Tennessee Comptroller of the Treasury regarding the correction of the state’s recent audit findings.

Committee Chairman Brad Johnson asked Watson whether it would help to have an outside accounting source assist the Finance Department and be on hand for any meetings with the state. “I think that can be beneficial,” Watson said, adding that she had sought information from two different CPA firms.

The committee unanimously recommended contacting Blackburn, Childers, and Steagall, a Johnson City firm the county has worked with before, to obtain information regarding a contract and that the comptroller’s office be contacted to schedule a time to meet with Finance Department staff. 

The nearly three-hour meeting heard Watson detail corrective measures her office was taking in response to the Tennessee Comptroller of the Treasury’s audit for fiscal year 2023 that revealed “material weaknesses, significant deficiencies, and noncompliance within Office of the Finance Director,” which resulted in 10 findings, six of which were a repeat of the findings found in an audit of the fiscal year 2022.

The state report cited several deficiencies in Watson’s office, which included a failure to properly maintain accounting records; a failure to hold spending within the limits authorized by the County Commission; being deficient in the posting of journal entries; not maintaining capital asset records properly; and not properly placing amounts withheld from contractor payments in an escrow account.

“We do acknowledge that we fell short in several areas last fiscal year. We know that. We’re very, very, very well aware of that,” Watson said, reading from a prepared statement. “Although we made a lot of improvements from where we have been in the prior year, those were just not sufficient enough for the audit findings, unfortunately. We all struggled with the results and we learned some really hard lessons from them.”

Watson provided a handout to committee members, which Johnson and the finance director used to guide the committee through the audit findings and related corrective measures.

With respect to the finding of noncompliance with the county’s balanced budget policy, Watson said, “We have gone back and reviewed budget policy, but the biggest thing we need to make a recommendation on is the Resolution 688 that was done in January of 2018.” The resolution addresses the allocation of unassigned fund balance and has come up before. During a June 8, 2022, meeting, Watson told committee members auditors wanted to see updated language as to how funds come from the unassigned fund balance. During that meeting, the committee decided to defer any changes until the state provided the wording.

“The issue is we need to be more specific,” Watson said Thursday night. “This finding is not ever going to go away until we are a little bit more specific in the way that this resolution is written.”

Following a discussion as to whether the resolution was necessary, and whether it was better to rescind or amend the resolution, the committee voted unanimously to rescind Resolution 688.

Concerning journal entries – a finding Tennessee Comptroller of the Treasury Jason Mumpower honed in on during a visit earlier this month – Watson said she had reviewed past county records. “Yes, we have more, but we don’t have extensively more – and to clarify, journal entries are transactions. Not all transactions are corrections or errors, they’re transactions. We are on an extremely manual system.”

Watson oftentimes during the meeting referenced the difference between her previous work in the private sector and the fast-track transitioning to leading a government finance office. The Financial Management Committee voted 6-1 to hire Watson in July 2021 as a replacement for then-Finance Director Brad Burke. According to previous reports in The Star, Burke abruptly resigned during an Aug. 25, 2021, Carter County Commission meeting.

“We told Mr. Burke that we expected him to train the new person, but he failed to train anybody in that department,” then-Committee Chair Ginger Holdren said, explaining Watson and Deputy Director Audra Gerty were “ready to step into the tasks,” Holdren also said no records or computers had been shared with anyone by Burke.

During Thursday night’s meeting, Watson assured committee members that she and her team were engaged in webinars, classes, “anything we can do, anything we can find that will improve our knowledge, we do it, on a daily basis.”

Following the meeting, Carter County Mayor Patty Woody also wanted to give words of assurance to taxpayers: “There is no fraud. There is no money missing. We’re going to get it right.”