Audit is IN

Paperwork problems led to discrepancies in Sheriff’s office car count

Apparently it worked this way:

The crosschecking got crossed up. Some cars got crossed off one list without being crossed out on another.

Without knowing where the cars were, some people got cross, and that is the cross the county’s administration and sheriff have had to bear for nearly a year.

But with the release of an audit report by Tennessee’s Comptroller of the Treasury in December, Blount County’s mayor, finance director and sheriff all say the matter of the unaccounted-for cars is closed.

However, at least one county commissioner who has been persistent in his quest for answers about the vehicles says he will believe it when he sees that all the i’s were dotted and all the t’s were, you know, crossed.

The controversy began slowly as some of the county’s budget hawks questioned why the Blount County Sheriff’s Office needed to add to its fleet of vehicles. Sheriff James Berrong said that his department routinely replaces a consistent number of vehicles - particularly law enforcement cruisers - when the mileage on them gets high enough to bring their mechanical reliability into question.

So where do the ones go that have been taken out of service? That was the hawks’ question.

Bingo. The paperwork didn’t jibe.

The Sheriff’s Office said the vehicles were sold, salvaged, parted-out or transferred to the service of other county departments.

The county Accounting Office balance sheets and a previous comptroller’s audit did not reflect those migrations.

If what resulted between the hawks and the government was a difference of opinion, then the Civil War was a breach of diplomatic protocol.

There have been recriminations -- professional and personal - plus under-the-breath talk of political collusion and veiled references about whether there had been waste, abuse, even fraud involved in the disposal of the vehicles.

The comptroller’s audit spotlighted lapses in reconciling the Sheriff’s Office inventory records with those of the Accounting Department and examined various policies involved and recommended eight “shoulds”:

The Sheriff’s Office should:

** Reconcile its inventory listing with those of the Accounting Department “prior to signing the form as evidence of accuracy.”

** File a notice of surplus vehicles with the Purchasing Department before vehicles are sold.

** Insure that acquisition forms are filed with Accounting for all donated or seized items the BCSO takes possession of.

** Reconcile its vehicle count with Accounting’s annual inventory.

The Accounting Office should:

** Review records of vehicle auction sales to make certain sold items are removed from their inventory.

** Inspect all paid invoices for possible capital items

** Document its annual “random physical inspection” of each department’s inventory.

County policies should:

** Have a mechanism whereby items “acquired through forfeited seizures” are added to the county’s capital assets records.

In a response from County Mayor Jerry Cunningham and Finance Director Dave Bennett that was part the audit report, it was noted that some of the recommendations have already been implemented, including a monthly reconciliation of vehicle inventory between the BCSO and the Accounting Department, which goes beyond what the comptroller calls for.

Bennett, Berrong and Cunningham all say this report, its recommendations and their implementation mean this controversy can be crossed off the list in its entirety.

“No further investigation,” Bennett said, “is warranted or planned.” He said the records of the audit provide all necessary documentation about the disposal of the vehicles and that the documentation is open to the eyes of the public or other government officials who might want to examine it.

“We do not do everything right all the time,” Bennett admitted. But, he said, he is “comfortable” that the annual audits by the state serve as a backstop to the Accounting Department’s own records and that “if they find a discrepancy, we can fix it and do it right.”

County Commissioner David Graham, who has doggedly pursued answers in connection with the car controversy, said he will be among those who take Bennett up on his invitation to view the records.

Graham said he got his copy of the audit Dec. 20, and he wants to know if the audit was done by random sampling or whether it accounts for every single vehicle that was on the county’s books.

“If it was random,” Graham said, “I would like to know how many more” vehicles are involved than were reported.

“We spent several months,” he said, “trying to find out whether there was a disconnect between what was on the books of the county and what was in previous state audits.

“We were told there was no disconnect. The audit says there was.”

Graham says he will be taking a look at the “reconciliation and documentation” at his earliest opportunity.

Attempts to reach community activist Jim Folts, the most vocal non-government critic in the vehicle controversy, were unsuccessful.

Graham said there have been attempts to “paint me as a follower of a Folts cult, and that’s not the case. And I’m not mad at the sheriff.”

He emphasized that he is “not accusing anybody of anything.” He just believes that now that the audit is finally in, those in pursuit of answers should “go to the next step” of viewing the documentation and “finishing things up.

“After what we have been told, the taxpayers deserve that little bit more.”

Graham said he wants to see the “paper trails” on disposed-of vehicles and the dollar amount received for those auctioned, sold or salvaged.

“There are a lot of good things in the audit,” he said. “But some are still troublesome.”

Sheriff Berrong said that if critics are “not satisfied with this, there is no further we can go.

“We did sign off without verifying” some vehicle inventories, the sheriff said. It was “taken for granted” that the BCSO inventory and the Accounting Department’s were the same. Those discrepancies have been resolved, he said, and if critics are “not satisfied, there’s nothing else we can do.”

Berrong said vehicles are added to or removed from inventory based on their vehicle identification numbers. Vehicles are removed when they are sold, salvaged or parted-out to the extent that they no longer qualify as a viable vehicle.

Cannibalizing wrecked or out-of-service vehicles for usable parts has saved the county countless dollars over the years, the sheriff has said.

Those taken out of day-to-day patrol service are often used for required emergency vehicle operation training or may be transferred to other county departments to live out their mechanical lifetime in duty less crucial or strenuous than law enforcement patrol.

The controversy over the “missing” cars, Berrong said, has been “distracting us from doing our job in law enforcement. It stops me and my entire staff and costs a tremendous amount of man-hours.

“It’s been proven we run a good operation,” he said. “It’s honest and one of the best respected in the state. We’re proud of that.”

The sheriff said the audit report was delayed in being released because investigators for the comptroller’s office received more than 40 anonymous hotline complaints in connection with the cars controversy.

Mayor Cunningham said that chasing down those complaints - all of which, he said, proved invalid - cost state taxpayers as much as $12,000 and possibly a like amount in Blount County, thereby having exactly the opposite effect that the original budget critics said they wanted. It cost the county money instead of saving it.

The mayor said the audit report should draw the issue to a close for “most reasonable-minded people.”

Berrong echoed Cunningham’s suspicion that the hotline complaints were orchestrated by those on the opposite side of the issue.

“These are the same people,” Cunningham said, “who said we would be $7 million over budget (last year), and we came in a half-million dollars under. They were only $7 ½ million dollars off.”

In a letter dated Dec. 21 to all Blount County commissioners, Bennett said that the county vehicle inventory had been updated and said that there had been “vehicles on the inventory listing that had been sold, scrapped or disposed of in previous fiscal years.”

The discrepancies were because, the audit says, “a representative of the Sheriff’s Department signed off on the annual listing without verifying its accuracy.”

“As I have said to you time and again,” Bennett wrote to commissioners, “there have never been, and are now, no missing cars.”

He acknowledges that “proper paperwork had not been filed,” but reiterated what he stated in his response in the audit:

“I will never remove assets from the county’s books without proper documentation being on file to back up the removal of that asset.”

And he emphasized that the audit report contains “no hints of fraud, waste or abuse in any” of its findings.

Excerpts from the audit report include the following from the auditors:

** “Finding 07.02: The office of the director of finance and sheriff and the purchasing department had deficiencies in procedures and controls over vehicle inventory records.

** “When we conducted interim audit testwork, eight vehicles were on the Accounting Department’s inventory that had previously been removed from the Sheriff’s Department inventory. The Accounting Department subsequently obtained paperwork verifying the auctions/transfers of these vehicles and removed them from their inventory.

** “Donated and forfeited seized vehicles had not been added to the Accounting Department's inventory of the Sheriff Department’s equipment on a consistent basis. County policies require acquisition forms to be completed and filed with the Accounting Department for donated items. However, the Sheriff’s Department had not provided such forms for several donated items.

** “County policies do not address forfeited seized vehicles; therefore, no forms were filed to notify the Accounting Department of the vehicles obtained through forfeited seizures.

** “One vehicle purchased in 2002 was not reflected on the Accounting Department’s inventory of Sheriff’s Department equipment, but was reflected on the inventory maintained by the Sheriff Department’s. This discrepancy should have been detected by the Accounting Department when the invoice was paid and should have been detected by the Sheriff’s Department if the Sheriff’s Department had adequately reviewed the annual inventory provided by the Accounting Department.

** “The audit of the financial statements of Blount County disclosed one significant deficiency in internal control. The deficiency was not considered to be a material weakness.

** “The audit disclosed no instances of noncompliance that are material to the financial statements of Blount County.

** “The audit disclosed no significant deficiencies in internal control over major programs.”

** “As of September 2007, the Accounting Department and Sheriff’s Department have reconciled the above-noted differences.

** “Officials at the Sheriff’s Department should reconcile its inventory listing with the listing provided by the Accounting Department prior to signing the form as evidence of its accuracy. The Sheriff’s Department should file a notice of surplus vehicles with the Purchasing Department prior to the vehicles being sold, and the Accounting Department should review records of auction sales to ensure that items sold have been removed from the Accounting Department’s inventory records.

** “The Sheriff’s Department should ensure that acquisition forms are filed with the Accounting Department for all donated items. County policies should address items acquired through forfeited seizures to ensure that those items are added to the county’s capital assets records.

** “The Accounting Department should ensure that all paid invoices are inspected for possible capital items. The Sheriff’s Department should reconcile its inventory listing with the annual inventory provided by the Accounting Department. The Accounting Department should document its annual random physical inspection of each department’s inventory.”

From the Management Response: County Mayor and Director of Finance:

** “It should be noted that two steps have been added to our procedures since June 30, 2007.

** “First, a monthly inventory of vehicles is verified by Sheriff department personnel. Second, auction records should be reviewed with accounting, purchasing and Sheriff’s department staff to ensure timely removal of assets from our books.”

** “It should also be noted that the Accounting Department, in going above and beyond the policies currently in place, did a 100 percent physical inventory of all Sheriff’s Department vehicles prior to the September date referred to in the finding.

** “It should also be noted that nowhere in the finding is there any reference to any missing vehicles. Actually, the finding confirms that all discrepancies between the inventories have been resolved.”

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