Fannin County received its 2015 audit in July.  The good news is that the county has come in under budget.  For 2015, the general fund was at $16,171,000 and expenditures were $16,098,149, which means a savings of $72,851.  A copy of the audit is on the Fannin County website (click here to view).These figures do not represent SPLOST or hotel tax funds. Fannin County has an emergency reserve of money which will allow it to operate for approximately six months if absolutely no revenue came in.  According to Rita Davis-Kirby, Chief Financial Officer for Fannin County, some counties in Georgia have zero money in their emergency reserves.

The audit found that some county funds had expenditures over what was allocated in the 2015 budget.  These funds include:  General Fund, Confiscated Assets Fund, Special Revenue Fund, Multiple Grant Special Review Fund, Drug Special Review Fund, and Excise Tax Lodging Special Review Fund.  As Ms. Davis-Kirby stated, these accounts are difficult to precisely budget for since the amount of money the funds will accrue during the year depends on events that the county cannot accurately predict.  For instance, at the beginning of a year, departments cannot state with 100% accuracy what grants they will win during the year. Also, the audit pointed out that the Law Library Special Review Fund, Clerks Technology Special Review Fund, Revolving Loan Special Review Fund and the Donations/Special Projects Special Review Fund do not have annual budgets.  Ms. Davis-Kirby said that, in previous audits, the county had never received citations regarding the above-mentioned departments unbalanced fund sheets or annual budgets.

Within the audit there were 13 notations about how the Fannin’s accounting procedures can open up the county’s money to potential fraud and mismanagement.  This does not mean that fraud and mismanagement are happening in the offices and departments; it means that the current procedures make it more possible for errors in keeping track of money.

The 2015 audit found that EMS, the Development Authority, the Probate Court and the Sheriff’s Office, in terms of jail operations, do not have enough different eyes looking at the transactions in the departments to catch mistakes and ensure that money is going into the appropriate categories.  In most of the cases, the person who approves the purchase is the same person who writes the checks.

Best government accounting practices have two different individuals working the transactions.  For larger counties with a greater number of people who can do government financing, it is easy to solve this problem.  To solve this problem in a department like Fannin’s Development Authority, which only has one person, would mean hiring another person.  Since the audit, EMS has added Chief Director Robert Graham and Deputy Director Larry Thomas to financial transaction oversight process so that the person who writes the checks will be different from the person who approves the expense.  Ms. Davis-Kirby said that there are issues with lack of segregation in financial transactions every year and that the county addresses them as much as they can.

The auditors stated that the county should invest in more training about government accounting procedures at the department level.   Ms. Davis-Kirby agrees that there is always room for improvement in training.  She believes that the Board of Commissioners will address this in the upcoming year.  Also, government accounting procedures are quite different from general business accounting procedures, making it hard to recruit employees who specialize in government accounting.

Another finding is three departments have problems getting deposits to the bank on time, meaning within 7 days of obtaining the money.  – 67% of hotel/motel tax deposits, 65% of the Clerk of Court’s deposits and 47% of the Probate Courts deposits are untimely.  This does not mean that money is being mishandled.  However, having a lag between receiving and depositing money does provides greater opportunity for fraud.

Two departments, the Tax Commissioner and the Probate Court have an insufficient approval process in some types of transactions.  Ms. Davis-Kirby could not speak to this since she only receives an overall view of the individual departments.

Compared to the 2014 audit performed by RL Jennings & Associates, the 2015 Audit does show some improvement in the county’s accounting procedures.  The 2014 audit showed that the Roads Department had paid $239,000 for gas out of SPLOST funds.  By state law, SPLOST roads funds are specifically for construction and maintenance of roads and bridges, not for general operating expenses like gas.  Also, several departments needed more formal, written agreements about how transactions go between different department budgets.  Next, the firm said that at least two people need to review work hours submitted by county employees to catch any errors which many be present.  None of these problems are mentioned in the 2015 audit. The final deficiencies in the 2014 audit are similar as in the 2015 audit; some departments only have one person who both approves transactions and writes the checks.

This year, Fannin County hired Rushton & Company, LLC to conduct the county’s audit.  The new accounting firm did not have significant new insights into Fannin’s budget, but it did give really good ideas to move forward with said Ms. Davis- Kirby.  According to Ms. Davis-Kirby, the Board of Commissioners decided to switch accounting firms because “they felt that another firm’s opinion would be valuable in an effort to assure the citizens that tax payer money was and continues to be utilized in ways that best benefit the our citizens.”  For the audits from 2007 to 2014, the county used RL Jennings & Associates.