Tennessee 4th in poor auditing grade for local entities
An analysis by the Chattanooga Times Free Press of a database run by the U.S. Office of Management and Budget shows that 60 cities, counties or school systems in Tennessee have received an “adverse” audit report from the state comptroller’s office.
At issue is a 1999 rule, called the Governmental Accounting Standards Board Statement No. 34, requiring any public entity receiving federal funds to conform to its standards when reporting its assets ? roads, buildings, bridges and other infrastructure.
All counties, cities, school districts and other public agencies in Tennessee are required to adhere to the standards by 2008, said Richard V. Norment, assistant to the Tennessee comptroller for county audits.
The rule is “the biggest change for government accounting probably ever,” Norment said.
While most of the state’s larger counties are now in compliance, the focus currently is on smaller, more rural counties. The 60 adverse reports in Tennessee were handed out in 2003 and 2004 to push for enforcement of the rule, Norment said.
“Fifty-five percent (of counties) failed to comply at the end of 2004,” Norment said. “And 49 percent of school systems failed.”
Among the Tennessee counties cited was Rhea, where county executive Billy Ray Patton said the rule has required work for staff to follow. In 2003 the county had an adverse rating, but improved in 2004 to “qualified.”
“We are strictly in compliance now, but it’s not in our thinking that this new rule was a good thing,” Patton said. “I’ve said GASB (the new rule) was much ado about nothing, and I don’t see that it benefits our counties. But I can see how counties can be penalized.”
“It didn’t harm the county any, but it did nothing to increase our revenue or put more money in our budget, either,” he said. “If it improves our credit rating and helps us obtain some of these (federal) grants, it would be beneficial. We have to wait to see if that actually happens.”
But Bledsoe County Mayor Gregg Ridley called the change “a great thing” that will eventually save money for counties and taxpayers.
“In the accounting system we had done all these years, there was no depreciation for our roads and things like that. So we were not putting aside any money for us. This will force us to do planning,” he said.
The only states receiving a higher number of adverse ratings since 1997 were Illinois with 186, Oklahoma with 118 and Kansas with 86.
‘
Information from: Chattanooga Times Free Press, http://www.timesfreepress.com