The Tennessee Comptroller investigation into the Warren County Memorial Airport finally concluded and many deficiencies were found.
The Office of the Comptroller of the Treasury began investigating allegations of malfeasance related to the airport after the Comptroller’s Division of Local Government Audit issued a finding in the fiscal year ending June 30, 2020 Annual Financial Report that a cash shortage of at least $6,086,74 existed. The investigation was limited to select records for the period from May 1, 2019 through June 30, 2020.
The county dissolved the previous five-member airport commission in September 2022, but that board was operating during the period of investigation. The results of the investigation found that “Former airport commissioner failed to correct deficiencies previously reported by the office of the comptroller of the Treasury.”
The report states the airport commissioners failed to correct deficiencies reported in a Comptroller’s Special Report dated September 11, 2012, which detailed finding from July 1, 2007, through September 30, 2011. The report identified deficiencies including: a cash shortage, voided receipts, missing receipts, unaccounted airplane hangar rental revenue and improper fuel usage. The report recommended the airport commission implement internal controls, review reconciliations of reports and investigate variances, but the airport commission failed to implement the recommendations.
“This is certainly an unfortunate situation for our community and these findings and the misuse of taxpayer dollars falls solely on the former airport commission and its former director,” said County Executive Terry Bell in a press release.
The report states the airport had numerous operational deficiencies. The former airport commission did not review or reconcile aircraft fuel purchased for resale with revenue received from sales. The former airport commission did not review or reconcile hangar and storage space rental fees with collections. There are established rental fees for each hangar or storage space, so the airport commission should have an estimated amount of monthly revenue based on occupancy.
The report states, “In the November 4, 2019 airport commission minutes, the airport manager presented a monthly business report for October 2019 stating total aircraft fuel sales of $15,680.15 and total deposits of $18,205.28. The difference in sales and deposits was $2,525.13, which should have been aircraft hangar and storage space rent. The amount reported as hangar rent and deposited with the county trustee was $7,845.66. However, the manual deposit worksheet showed collections of $7,565.66, and the computer-generated sales report for October 2019 showed collections of $6,340.”
Investigators performed a manual calculation of expected total income from the hangars and they found it should have totaled $6,940 per month.
The former airport commission failed to utilize their own computer system, which could produce numerous reports to account for the financial activity of the airport. They instead manually generated deposit worksheets for collections used for revenue deposited with the county trustee.
The report states, “This deficiency not only undermines the validity of the revenue deposited, but also avoids a precise computer-generated cut-off date at which all revenue and reports should be reconciled. The airport commission should follow good business practices and require the airport manager to produce computer-generated reports and reconciliations as required by their internal control policies.”
The former airport commission failed to provide written policies and training procedures resulting in employees being inadequately trained on the accounting system. The former airport commission failed to provide proper safeguards over equipment.
The former airport commission had not adopted a policy for the use of airport owned vehicles. Investigators were informed by a former airport commissioner that he witnessed a former airport manager driving an airport-owned vehicle for personal reasons for two weeks. The former commission did not reprimand or take the vehicle away from the former manager.
The former airport commission did not ensure security cameras were working properly. Investigators were informed the cameras were inoperable and this issue went unnoticed or unreported for an unknown amount of time.
The investigation also found some former airport commissioners had conflicts of interest with the operations of the airport. Some former commissioners owned planes, rented hangars, purchased fuel from the airport and voted to establish the cost of aircraft hangar rentals and fuel prices. These former commissioners also had keys to the offices and to the fuel stations.
The report states, “Tennessee Code Annotated, Section 12-4-101, is the general conflict of interest statute that applies in all counties. This statute prohibits anyone who votes for, lets out, or in any manner supervises any work or contract from having a direct financial interest in that contract, purchase, or work, and it requires disclosure of indirect financial interests by public acknowledgment.”
The current airport commission indicated that they have corrected, or intend to correct these deficiencies. In Bell’s press release he explained the county had no oversight at the airport until this past September and they are working to ensure the airport will operate at the highest standards from now on.
“Prior to September 1, 2022 the Warren County Government had no oversight rights to any of the practices at the Warren County Memorial Airport. Since that date, the airport commission has been restructured and oversight has been put in place to ensure these events never happen again. A new director has been hired and the former commission has been dissolved. Proper security measures, accounting practices and checks and balances have been established,” said Bell.
