BY KRISTEN BUCKLES
Missing records, unauthorized purchases and duties unrelated to the district are among the findings from the 2013 Cross Anchor Utility District audit, which was released Wednesday.
These findings were fewer in number than in the 2013 audit of the Chuckey Utility District, which local Certified Public Accountant Mickey Ellis released two weeks ago.
Ellis performs annual audits for both districts, since they operate out of the same West Andrew Johnson Highway building and share many of the same employees.
In his preliminary findings, which he released in October, Ellis said that there were indications of "questionable practices by the management," a situation which prompted both districts to place four employees on leave.
These employees include: former manager Shirley Collins; her husband, Willie; their daughter, Kandie Jennings, who became acting general manager after Shirley Collins retired; and Jennings' husband, Bill.
Attempts to reach these individuals for comment have been unsuccessful.
The office of the Tennessee Comptroller of the Treasury is conducting its own investigation and has discussed the matter with the Tennessee Attorney General, according to the utility districts' attorney, Ed Kershaw.
In accordance with its normal policy, the state comptroller's office declined to comment or to acknowledge an ongoing investigation.
'WE PUT TOO MUCH TRUST'
Ellis' audit featured 11 findings, five of which he said are "material weaknesses," while others he characterized as "significant deficiencies."
A "material weakness" is "such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis," the audit says.
A "significant deficiency" is "less severe than a material weakness, yet important enough to merit attention by those charged with governance."
Several findings he describes as violations of state law.
Cross Anchor Utility District President Lloyd Dawson said that he would comment more publicly when the state Comptroller's office releases its findings, the timing of which is uncertain.
"The board will be looking at all these findings and really not waiting on the state Comptroller's report before we start taking action on the findings that [Ellis] has already identified," Dawson said.
"I don't know that we totally concur with all of them, but we do accept what he's found. We will be looking at those and definitely working toward correcting those issues."
Dawson said some customers do not have the correct conception of the board's role in regulating the district's activities. He described that role as oversight and review of reports from the management.
He said that the board requested these reports, but that they were "never presented."
But the board should have been adamant in its requests, he stated.
"Our problem is, we put too much trust," Dawson said. "The board most likely probably didn't do as much scrutinizing as we should have.
"That's where the blame probably partly lies with the board," he added.
"We should have had more input than we did. Most of those findings were based on the board not knowing."
This is a summary of the 11 findings listed in the new audit of the utility district by Ellis:
* Unauthorized Bonuses
"The manager effected a holiday and longevity bonus check for the former manager, as well as bonuses for herself and selected others without apparent authority or approval from the board," according to the audit, which lists this as a violation of state law.
The Greeneville Sun previously reported Shirley Collins' 2012 bonus at $28,700.
Kandie Jennings received a $2,640 bonus in 2013 and a $6,400 bonus in 2012.
According to the board, these bonuses were unauthorized.
* Duty Requirements Unrelated to District Business
"Several employees were required at various times to perform duties at the manager's discretion which were unrelated to district business, but wages were paid from district funds indirectly, through shared office expense," according to the audit, which lists this as a violation of state law.
Dawson said that employees have told him that former management required employees to go shopping with them or to babysit for them. Employees would then be paid from district funds, according to the report.
He emphasized that this is what he has been told from employees and that he has not directly seen evidence of this practice having taken place.
* Unauthorized Fuel Purchases
"An employee was paid mileage for reading the master water meters. However, he had a Fuelman credit card on which he regularly purchased gasoline. [...]
"Diesel purchases were also charged to the card, but all necessary off-road diesel fuel is purchased at the local Co-Op utlitizing information kept in each piece of machinery that consumes it," the audit states.
"The district contributed through the joint (Force) account."
The audit further notes that "the district is in violation of state law and fails to safeguard its resources."
Dawson said that the employee in question is Willie Collins.
* Undocumented Expense Reimbursements
"Several employees receive fixed annual reimbursement amounts for business use of their personal cell phones. They are not required to justify or account for the business usage nor must they request the reimbursement," according to the audit.
"Board members were unaware the amounts were being paid and no approval was evident in the minutes."
The audit notes this as a violation of district policy, as the district did not bid the service.
The Greeneville Sun previously reported that Shirley Collins' 2012 telephone allowance came in at $2,400. Kandie Jennings' was $3,600 in 2013 and $3,000 in 2012.
* Inadequate Purchasing Policy
"While the district has adopted a purchasing policy that is compliant with [state law], it is not detailed enough to define discretionary purchase authority/limits applicable to management; amounts above which board approval is required," according to the audit.
"The utility manager held a retirement party for the retiring manager at a total cost of approximately $7,600. The board's input regarding appropriate cost was not sought.
"As a result, the board had no opportunity to evaluate whether the cost was in compliance with applicable law," the audit continues, noting this as a failure to safeguard assets.
* Failure To Communicate Information
"The manager was routinely provided essential financial information [...] by the district accountant to present at the regular board meetings. The manager did not deliver the documents for the board's consideration," according to the audit, which notes this as preventing the board from providing oversight.
* Vacation Policy Inconsistently Applied
"The manager effected pay for unused vacation for herself and selected others while promulgating the belief among remaining employees that vacation days were to be used or lost, and a payment option was not offered," according to the audit.
Dawson said that the board has begun to address vacation policy and will continue to make changes in upcoming meetings.
* Missing Records
"Numerous receipts for credit card purchases, fuel purchases and check stubs/receipts for payroll payments could not be found in the office or other district-owned locations," according to the audit, which notes that this may be a violation of state law.
* Improper Employment Practices
"Management (non-board) fostered an employment environment that exposed the district to legal challenges in the areas of whistleblower policies, retaliatory discharge, and wage and hour violations," according to the audit.
"This occurred through direct threats to several employees for their continued employment if they were guilty of upstream information transfers."
* Unauthorized Loans
"The manager caused Cross Anchor Utility District to write a check for a Chuckey Utility District debt (a tank-painting invoice in the approximate amount of $53,000) from the Cross Anchor money market account because cash flow was such that Chuckey could not pay the bill when due," according to the audit.
* Purchasing Policy Not Followed
"The manager failed to acquire bids and document compliance with procedures for equipment purchases in excess of $10,000 per item," according to the audit.