The state comptroller’s audit of Wilson County found five significant accounting errors totaling nearly $14 million that were the result of “lack of management oversight in the county finance and register of deeds offices.”
The accounting errors that created the discrepancies have been fixed, according to Wilson County Finance Director Aaron Maynard. The only money paid was nearly $36,000 by the Wilson County Register of Deeds office that was owed to the Internal Revenue Service as a result of not filing required W-2 employment forms dating back to 2012.
A state audit is conducted every year and analyzes the financial aspects of the county.
State Comptroller Justin P. Wilson found five budget differences that needed to be corrected — three audit adjustments and a delayed budget report from the finance department, and the IRS penalty to the Register of Deeds.
Wilson reported that as of the end of the fiscal year, there were audit adjustments totaling $908,364 which were required for the financial statements to be materially correct at year-end.
“This deficiency is the result of a lack of management oversight. Wilson County should have appropriate processes in place to ensure its general ledgers are materially correct,” the report said.
Maynard didn’t submit the county’s budgets on time, the report said. They are required no later than Sept. 30. Wilson County submitted budgets on Oct. 6.
“These deficiencies existed due to a lack of management oversight,” the report said. “The original budget posted to the accounting records for the General Debt Service Fund was $250,000 less than the amount approved by the county commission.”
In addition, approved budget amendments related to revenue accounts were posted backwards in the accounting records, “resulting in the understatement of budgeted revenues. The total of those was $740,794. The county also agreed with that finding and has made the corrections required,” the report said.
Another finding stated that there was a difference by $4,785,534 in the beginning balance from the prior year. The report of capital assets in two areas failed to agree by $7,493,060.
“Multiple issues were noted in accumulated depreciation, including assets not being depreciated at all, assets depreciated more than they should be, and assets being depreciated based on an incorrect acquisition date.”
Maynard said new department software led to some of the deficiencies.
“The repeat finding was regarding the capital asset records,” Maynard said, adding that the issue began “with a reporting financial software conversion that we did in October of 2018 (for fiscal year 2018-2019. The fixed assets weren’t finished being converted to the new software until sometime early in (fiscal year ending June 30, 2020).”
When the department realized the reporting problem, “we brought in a consultant who was very familiar with old software and he worked with the new software company to fix the issues. It was reported back to me that the issues were resolved.”
He said that the depreciation reports are something “that we generate once a year and only for the auditors. I didn’t follow up on the issue as I should have. When we generated the fixed asset reports for (fiscal year ending June 30, 2020), it became clear very quickly that the issue was not resolved as we had been led to believe. I stress that no fixed assets are unaccounted for. We provided a reconciliation to the auditors that balanced beginning fixed assets.”
Maynard said that the department is “top of the situation, but I do expect to have a prior period adjustment next year as we have noted an error in the depreciation calculations related to the conversion.”
The corrective action plans have already been implemented, Maynard said, adding that “tasks within this office have been reassigned to ensure that we have the right person matched up with the right task and can complete all the tasks timely and accurately.”
In the Register of Deeds office report, the comptroller found that W-2 forms were “not reported and filed with the internal Revenue Service (IRS) for the 2012 calendar tax year. While the office was contacted multiple times by the IRS beginning in February 2014, the deficiencies were not addressed until the current register became aware in October 2019.”
The register of deeds was assigned an IRS tax advocate who investigated the case and ultimately ruled the interest and penalty were owed. As a result, the IRS assessed interest and penalty totaling $35,652.91 that were paid February 2020. This deficiency resulted from a lack of management oversight.”
Wilson County Register of Deeds Jackie Murphy agreed with the findings “and will make sure this is resolved and will never happen again.
Wilson County Commissioner John Gentry said he was concerned about the findings.
“The finance department should be called out,” he said. “I don’t believe we have had a clean audit for the six years I have been on the commission.”
The report was issued Dec. 21, 2020. Copies of the report were given to Maynard, Murphy, County Mayor Randall Hutto, Wilson County Commissioners and Wilson County Schools Director Donna Wright. The report can be found at https://tinyurl.com/y2svhn6p.