Warren County government will not receive an award from the state for having a clean financial audit report two years in a row.

In 2017, Tennessee Comptroller of the Treasury Justin Wilson congratulated Warren County on being one of the very few communities in the state to receive a clean audit report for fiscal year 2015-16.

A clean audit indicates county leaders have established strong internal controls and accountability for taxpayer dollars.

The state recently released its findings for fiscal year 2016-17 and cited two issues, both pertaining to Warren County Schools.

Finding one: Expenditures exceeded appropriations because they did not comply with the county’s internal auditing standards. 

“Expenditures exceeded appropriations in 16 of 52 salary line items of the General Purpose School Fund by amounts ranging from $392 to $103,755. The budget resolution approved by the County Commission states that the salary, wages, or remuneration of each official, employee, or agent of the county shall not exceed expenditures that accompany the resolution. Therefore, the salaries that exceeded line-item appropriations were expenditures not approved by the County Commission. This deficiency resulted because management failed to hold spending to the limits authorized by the County Commission.”

The state auditor recommend “expenditures should be held within appropriations approved by the county commission.”

That issue, says Warren County Finance Department director Linda Hillis in her response to the state, lies not in the school exceeding its budgetary line items for salaries as approved by the County Commission at the beginning of the fiscal year (July 1, 2016) but salary budgetary transfers of the school not being presented to the County Commission for approval during the fiscal year.

“Budget transfers between expenditure line items, including some salary accounts, within major categories were approved by the Board of Education and presented to the Warren County Financial Management Committee for approval. Upon approval of the Financial Management Committee, the line-item transfers were entered into the system leaving no expenditures exceeding budgeted amounts at June 30, 2017.”

Warren County’s belief, says Hillis, is the budget transfers only needed School Board and Financial Management approval.

“Going forward, Warren County will address all necessary increases to salary accounts by presenting a budget amendment to the Warren County Commission for approval as recommended,” she said.

Director of Schools Bobby Cox says proposed budgets at the beginning of the year are estimated guesses by department directors on expenditures during the next year and all department directors are allowed to move money between line items when necessary.

“We estimate our budget in May,” said Cox. “It’s our best guess. I can’t control who’s going to retire in June, July, August or any other time during the year. If we have to hire someone in who has more experience than the person who retires, that’s going to cost us more. You are allowed to move money from one budgeted account to another budgeted account. It’s a budget amendment and it’s allowable. When we have to do that, I follow my process to the letter.”

Cox says the audit report makes it appear money has been misappropriated when it has not.

“We have never had to take line item category changes to the County Commission,” he said. “Linda has done this a lot longer than I have and that has never been done. Last year, the county was given an award for no audit findings but we did the same thing during that year. There’s not any money missing. There’s not any money been misappropriated. It’s all been done in the public eye. The way this makes it look is that we’ve done something wrong. That bothers me. We’ve done things the same way this year as we have in year’s past, but for some reason, we have this finding.”

Finding two: General ledger payroll liability accounts were not reconciled with subsidiary payroll records and payments each month in the General Purpose School, School Federal Projects, Central Cafeteria, and Schoolwide Consolidation funds.

Cox says the state’s second finding has been a longstanding issue as well and going forward, general ledger payroll liability accounts will be reconciled with Warren County Board of Education compliance personnel on a monthly basis.