IN THE NEWS
KNOXVILLE NEWS SENTINEL
By Natalie Neysa Alund
Wednesday, March 16, 2011
The disclosure was part of Brown, Jake & McDaniel's yearly audit to the city, released Tuesday.
"We noticed some employees were cashing personal checks out of the cash drawer," according to the Knoxville-based CPA firm's report, which covers the fiscal year ending June 20, 2010. "Occasionally, these checks were being held and not immediately deposited."
Auditors also found that a city employee made three purchases on city accounts that were not for municipal purposes.
Other deficiency findings included the Lenoir City Utility Board's lack of documentation for travel and meals related to conferences. That finding also was reported during the prior fiscal year's audit and is something city officials said they'd correct by adopting a travel policy that monitors documentation.
The report itself does not detail names, dates or financial figures about those findings.
"Operating deficiencies are more than likely not in the report," said Terry Moats, with Brown, Jake & McDaniel. "We learned about them through audit procedure."
City Administrator Dale Hurst said the information was disseminated when auditors questioned city employees when they began the auditing process in October.
Former city treasurer/recorder/clerk Bobby Johnson said he told auditors about employees cashing checks and other issues with the cash drawer.
"They asked us if we knew of anything fraudulent going on. I told them about the checks before I left office," said Johnson. He could not recall when he informed auditors of the checks.
Johnson stepped down from his elected post Dec. 31 and later told a Tennessee Bureau of Investigation agent in a recorded interview that Councilman Eddie Simpson threatened him about reprimanding four assistant clerks and placing their written reprimands into their personnel files. Johnson would not say what the threat was, and Simpson has denied the allegation.
Agents have questioned people about missing paperwork involving assistant clerks Jennifer Jackson, Shelley Herron, Rebekah Haydon and Julie Harvey, who were reprimanded by Johnson and his predecessor, Debbie Cook, who retired early from her post in 2007. The two former officials said they wrote the assistants up for reasons that include falsifying time cards, writing faulty arrest warrants and sending pornographic e-mail at work. Cook and Johnson said they tried to reprimand the clerks but that often nothing happened when they alerted city officials about the reprimands.
In January, the News Sentinel obtained copies of July 2010 reprimands written by Johnson, but they were not in the clerks' personnel files during a public inspection by a reporter. Loudon County District Attorney General Russell Johnson then asked TBI to investigate.
Aside from the operating deficiencies, Hurst said he was pleased with the results of the audit because the fund balance at the beginning of the fiscal year was $515,007 and its ending fund balance was $1,037,552.
"We had a surplus, and I was encouraged with that," Hurst said. "Anytime you have surplus in a recession it's pretty good."
Regarding employees using City Hall's cash drawer for personal reasons, Hurst said newly appointed city recorder Jimmy Wilburn put the kibosh on that practice.
"I met with Jimmy on that and he created a new policy and went over it with the staff," Hurst said. "That's just inappropriate."
None of the assistant clerks under scrutiny have been fired; they have been verbally reprimanded, Hurst said. Meanwhile, TBI spokeswoman Kristin Helm said the investigation remained open Tuesday.
Natalie Neysa Alund may be reached at 865-342-6307.