The State of Tennessee Comptroller of the Treasury Department of Audit has released the Annual Financial Report of Cannon County for the year ending June 30th 2015.
The audit resulted in only four findings and recommendations which have been reviewed with Cannon County Executive Mike Gannon.
The General and REACH program funds had deficits in unassigned fund balance of $197,239.00 and $12,903.00 respectively. These deficits resulted from a lack of oversite which allowed expenditures to exceed available funds. The State recommends Officials should liquidate the deficits in unassigned fund balance. Steps should be taken to ensure that expenditures are held within available funding.
2nd finding was that Expenditures exceeded appropriations for the second year in a row. The State simply recommended again that expenditures should be held within appropriations approved by the County Commission
Third finding was that Cannon County has not properly complied with local legislation regarding wheel tax collections. The State findings state that Cannon County collects a wheel tax from its citizens based on a private act originally adopted in 1975 that enacted a tax of $10 per vehicles. The County Commission, by resolution, set an additional $40 per vehicle in 1999. Both pieces of legislation required the funds collected from the wheel tax to be used for school related construction, renovation or related debt incurred for such activities.
The state finds that proceeds from the wheel tax are deposited in the county’s General Debt Service Fund and constitute the primary revenue source for that fund. The examination revealed that the funds are being used to retire school debt; however, for several years, these funds have also been used to retire general county debt. This practice appears to have resulted in the county not restricting the use of the wheel tax funds according to the legislation that established the tax. The State says again this is as a result of a lack of management oversight. Their recommendation is to consult with legal counsel to confirm the intent of the private act and commission resolution regarding the collection and use of wheel tax funds and should compare annual wheel tax collections with allowable expenditures to ensure compliance with the provisions of the legislation. If any errors are discovered, a plan should be developed and implemented immediately to correct the issue
The last audit finding was of the Office of Road Supervisor. The Highway/Public Works Fund required material audit adjustments for proper financial statement presentation. The state says that at June 30, 2015, certain general ledger account balances in the Highway/Public Works Fund were not materially correct, and a audit adjustment totaling $369,328 were required for the financial statements to be materially correct at the year end. Generally accepted accounting principles require the Highway Department to have adequate controls over the maintenance of its accounting records. Material audit adjustments were required because the department’s financial reporting system did not prevent, detect, or correct potential misstatements in the accounting records. It is a strong indicator of a material weakness in internal controls if the department has ineffective controls over the maintenance of its accounting records, which are used to prepare the financial statements, including the related notes to the financial statements. These deficiencies are the result of a lack of management oversight. State Recommendation was that Cannon County should have appropriate processes in place to ensure that its general ledgers are materially correct.
These four audit findings will be addressed in detail by the Cannon County Audit Committee to correct these errors and continue moving forward.
