Tag Archives: audits

School money stolen for drinking, gambling

A former Knox County Schools supervisor accused of using his district-issued credit card to place online gambling bets pleaded guilty Wednesday to felony theft of more than $10,000, according to the News Sentinel.

Roger Underwood, 61, has agreed to a three-year sentence, but the details will be determined by Criminal Court Judge Scott Green on Sept. 29.

The state plans to object to judicial diversion, said Sean McDermott, a Knox County assistant district attorney general.

Underwood has agreed to repay the $11,989 he stole by that hearing, McDermott said.

The former accounts payable supervisor, who had an annual salary of $96,074, was fired in October after admitting to using his school credit card for personal purchases. Investigators found he placed bets ranging from $99 to $299 on the card, losing as much as $1,800 in one day gambling online.

A report from the Tennessee Comptroller of the Treasury also questioned $731 in charges during a retirement reception at a Mississippi casino, where Underwood also ordered martinis, peach schnapps and a $200 tray of hors d’oeuvres and gave a $115 tip.

He also received reimbursements for school-related trips he never took, officials said.

“Because Underwood was responsible for reviewing school credit card charges, including his own, officials were unaware of these inappropriate charges,” the comptroller’s report states.

Mismanagement prompts Dept. of Ed takeover at ASD

Tennessee Department of Education officials have been quietly taken over because of inept handling of fiscal affairs, according to a Comptroller’s audit outlined to legislators Wednesday. The actions included dismissal of the entire financial management staff at ASD. The audit reported troubles ranging from a $2,500 expenditure for a party where liquor was served to generally loose oversight of money.

Further from the Times-Free Press:

The intervention, which began last fall, only came to light Wednesday — the result of the public release of a blistering state comptroller performance audit that represented the watchdog agency’s first comprehensive look at the district’s internal controls since it was created in 2010.

Many of the findings don’t look good for the agency created to help low-performing schools. (Note: Full audit HERE)
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Audit catches theft of funds at Clarksville utility

News release from state comptroller
A special investigation by the Tennessee Comptroller’s Office, in conjunction with the Clarksville Police Department, has found that former materials management technician Tony Hams stole at least $47,518 from Clarksville Gas and Water.

Mr. Hams stole the money over a five-year period by making online personal purchases using a gas and water department purchasing card (P-card). Mr. Hams bought children’s clothing, Oakley sunglasses, health and beauty products, a bow and arrow kit, and many other items for his personal benefit.

Mr. Hams concealed his theft by fabricating invoices and requisition forms. He also logged fictitious items into the gas and water department’s inventory records. All of the personal charges on the P-card were paid with gas and water department funds.

Tony Hams was terminated from Clarksville Gas and Water on January 26, 2016. On June 6, 2016, the Montgomery County Grand Jury indicted him on three counts of theft over $10,000, one count of official misconduct, and ten counts of forgery.

“This theft was allowed to continue for several years because Mr. Hams was responsible for both ordering and receiving inventory items,” said Comptroller Justin P. Wilson. “It is important that supervisors carefully scrutinize invoices and verify that all items that are ordered and received are for legitimate business purposes.”

Clarksville Gas and Water Department officials have indicated they have corrected the deficiencies in the department’s financial processes.

Comptroller finds Luttrell city recorder stealing $120K

News release from state comptroller’s office
A special investigation by the Tennessee Comptroller’s Office has found that former Luttrell city recorder Rebecca Ailor misappropriated at least $120,506 in city money. Ms. Ailor issued more than 140 checks to herself or a family member from September 11, 2012, until February 22, 2016.

Ms. Ailor was able to conceal her theft by falsifying the vice mayor’s or mayor’s signature on city checks. She also recorded the checks as payments to legitimate city vendors, and prepared false documentation to support some of the unauthorized payments. After the Comptroller’s investigation began, she deleted the city’s computerized financial records; however, the city’s financial software vendor was able to retrieve the data.

Ms. Ailor admitted to investigators that she wrote the unauthorized checks for her personal benefit, falsified signatures, and falsely recorded many of the payments in order to hide their true purpose. She told investigators that she needed the money and was trying to make ends meet.

On May 18, 2016, Rebecca Ailor was indicted by the Union County Grand Jury on one count of theft over $60,000 and one count of tampering with evidence.

“It’s important for city officials to provide oversight of the financial process,” said Comptroller Justin P. Wilson. “Not only was one person responsible for issuing checks, recording disbursements and depositing collections, city officials did not review bank statements. This allowed this scheme to go undetected for more than three years.”
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Note: The audit report is HERE.

DHS defends child nutrition program from comptroller critique

At a legislative hearing, the head of the Department of Human Services Tuesday defended the agency’s operation of a food service program that has faced scrutiny following the release of several audits.

From The Tennessean:

Justin P. Wilson, the state’s comptroller, began a meeting convened by the Senate Investigations and Oversight subcommittee and likened the Department of Human Services to someone struggling with alcoholism.

“You can’t really solve a problem until you acknowledge that the problem is really there,” Wilson said, after ending a nearly 40-minute presentation outlining a series of audits his office performed that revealed significant problems with the department’s handling of food programs that provide nutritious food to children at risk for hunger.

Wilson argued that Human Services was currently operating with a handful of controls providing oversight of its operations, which he said were akin to having a building having just a few smoke detectors. Wilson suggested the department needed an entire sprinkler system in order to move forward.

During her portion of the presentation, Commissioner Raquel Hatter pushed back against the allegations that the department didn’t believe there were problems.

“On some level, we have been misinterpreted or misunderstood,” she said, adding that Human Services has made improvements on a variety of its functions, including an increase in the number of meals provided in food service programs and bolstering accuracy and timeliness of the Supplemental Nutrition Assistance Program.

While facing questions from Sen. Bo Watson about the fact that the comptroller found issues with the department’s handling of the program dating back to 2011, Hatter told the panel that they have made improvements in recent years, while pointing out that the job requirement for the person handling the program has changed.

The panel also heard from Monica Jones, who is overseeing the food program, who vowed to work to correct the agency’s handling of the initiative.

The hearing was called in response to three critical audits released over a two-week span by the Tennessee comptroller late last month. One audit released March 29 questioned $11.4 million in spending by DHS, most of that on its food programs. It described multiple violations of federal regulations and basic accounting practices. These included a lack of documentation for monies spent on food, a lack of verification that the agencies DHS contracts with are eligible to participate in the food program and staffing shortages at DHS that threatened its ability to provide oversight and prevent potential fraud, waste and abuse.

Another audit criticizes DHS child nutrition program

For the third time this month, the state Comptroller’s Office has released an audit critical of a child nutrition programs overseen by the Department of Human Services, reports The Tennessean. In this one, $11.4 million in spending is questioned.

Most of the spending questioned in Tuesday’s audit involved food programs for low-income kids. The programs have been pored over by lawmakers and the U.S. Department of Agriculture, and have been the subject of an ongoing Tennessean investigation. Last week, the Comptroller issued two separate reports on private agencies now under criminal investigation for pocketing tens of thousands of dollars in food program funds that never made it to children.

The $80 million food program is intended to provide meals and snacks to kids who lack access to nutritious food in a Tennessee, where one in five children is at risk for hunger. The funds come from the federal government, but DHS is responsible for overseeing the programs. DHS contracts with private agencies, providing the money for food purchases distributed in child care centers, after-school and recreational programs.

Tuesday’s audit called into question more than 10 percent of the food program’s annual operating budget, based only on a review of a small sample of private agencies participating. The audit described multiple violations of federal regulations and basic accounting practices, including a lack of documentation for monies spent on food, a lack of verification that the agencies DHS contracts with are eligible to participate in the food programs and staffing shortages at DHS that threatened its ability to provide oversight and prevent potential fraud, waste and abuse.

In several examples cited in the audit, DHS provided cash advances for food purchases to agencies that never requested them. In one example, DHS provided a $311,993 cash advance to an agency whose entire annual operating budget was $124,000. In another example, an agency receiving an un-asked-for cash advance said it was waiting for DHS to ask for it back.

The audit places responsibility for the oversight failures on DHS management, including its commissioner, Raquel Hatter.

Hatter — through spokeswoman Stephanie Jarnagin on Tuesday — declined an interview request… Jarnagin sent a statement from DHS that said, in part: “It is important to note that while State Audit has questioned costs in their findings, it does not mean that the questioned costs are specifically the result of fraud, waste or abuse.”

Audits find misdeeds in two child nutrition operations

In separate audits released today, the state Comptroller’s office has found misdeeds afoot in two child nutrition programs — on in Nashville, the other in Clarksville.

The news releases are below, along with a statement from the Department of Human Services disagreeing with some of the auditors’ comments.
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Audit ends small town ‘gentlemen’s agreements’

In the Jefferson County town of Baneberry, the city’s tractors and the employees who operate them are no longer available for personal yard work after criticism of the “gentlemen’s agreements” from the state comptroller’s office, reports the News Sentinel.

The state investigation found that city equipment and manpower in Baneberry, a town of fewer than 500 people, were used for grade work, bush-hogging and tree removal on private property, often at the direction of a former Baneberry mayor and a now-dead city official.

The officials are not identified in the investigative report.

Among the findings, a former city chairman of the road commission, also not identified in the report, told investigators he had an unwritten agreement with the former mayor that “he and his son could use the city’s tractor and implements as needed,” the report states. “This tractor had been previously sold by an affiliate of the former mayor to the city.”

Investigators also took issue with the city’s purchase in 2004 of the John Deere tractor without competitive bidding.

According to the report, Baneberry’s three current city commissioners — who include the mayor and vice mayor — had no knowledge of any such agreements. Likewise, Mayor Clint Hurley denied he was ever asked by a former mayor to use city equipment, the report states.

Former Baneberry Road Commissioner Jess Lunsford admitted the city provided an employee and a small grader to improve a gravel access road for a resident’s home.

“The owner paid the same taxes as everyone else, so the owner was entitled to some help,” Lunsford told state investigators. “The mayor agreed, and until the city accepted the street, we would allow the city employee to grade the street if the property owner would pay the city employee performing the work. This arrangement worked great up until now. We did not know that we were not supposed to do it.”

Audit finds $104K missing from indicted sheriff’s office

TRENTON, Tenn. (AP) — The Tennessee Comptroller of the Treasury’s investigation says an audit found a cash shortage of more than $109,000 in the Gibson County Sheriff’s Office.

Much of the shortage comes from falsified documents regarding overtime, vacation time and other pay for several current and former employees, state officials have told media outlets.

Former Gibson County Sheriff Chuck Arnold and 11 other former and current county sheriff’s employees were indicted on multiple charges Monday following an investigation by the Tennessee Bureau of Investigation.
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Auditors: Claiborne County ignored mandated employee retirement benefits

News release from state comptroller’s office
Dozens of Claiborne County employees were not participating in the Tennessee Consolidated Retirement System (TCRS) according to an audit just released by the Tennessee Comptroller’s Division of Local Government Audit.

Comptroller auditors found that 52 full-time employees of Claiborne County and six full-time employees of the Highway Department were eligible for participation, but were not included in TCRS. Claiborne County did not comply with the mandatory TCRS membership requirements, which are established by state statute (Title 8, Chapters 34-37, Tennessee Code Annotated). This resulted in a finding of material noncompliance.

County officials informed auditors that employees had been given the option to participate in the pension plan, and they were unaware that participation was mandatory.

Due to this issue, auditors were unable to determine if Claiborne County’s pension liability was recorded correctly. This resulted in qualified opinions on the county’s financial statements.

Auditors also wrote two findings that were repeated from last year’s audit report. These findings are related to employees’ accrued leave balances exceeding the maximum provided by the county’s personnel policy, and an inadequate separation of financial duties in four county offices.

“County leaders and Highway officials must ensure their adherence to state law,” Comptroller Justin P. Wilson said. “I encourage Claiborne County officials to contact the TCRS to create a plan to correct this situation.”

To view the audit online, go to: http://www.comptroller.tn.gov/la/