PF needs “better internal controls”
Pigeon Forge city officials held a special meeting Wednesday morning to hear a presentation of an independent annual audit of the city’s finances for the fiscal year ended June 30, 2005.
“There weren’t any disagreements with management and everything went real smoothly,” said Larry Elmore with accounting firm Pugh and Co.
Both Elmore and his associate Scott Lowe, with the Knoxville firm, were present to explain the audit to the city commissioners, the City Manager, Earlene Teaster, as well as the City Recorder, Dennis Clabo.
While the auditors offered mostly praise for the city’s operation, a few of the suggestions made were repeat concerns from last year’s annual audit.
Elmore recommended, as he did during last year’s audit, that the city “take a look at how to achieve better internal controls.”
“Separation of duties is a common issue with cities and non-profit organizations in situations where there might not be enough funds to hire” enough people to do so. The auditors suggested perhaps rearranging duties in order to make it so that any irregularities would not go unnoticed.
It was also recommended that the city balance its accounts receivables books every month as opposed to waiting till the end of the year to discover that they’re out of balance.
“I strongly suggest that the city look at the possibility of hiring an IT (information technologies) guy to specialize in that area, full-time,” said Elmore. “You can’t manage an entity this size without a full-time IT person—someone to come up with ways to improve the system, instead of juts fixing it when there’s a problem.”
Another repeat suggestion from last year’s audit called for a detailed use and non-use policy for city property. Elmore was referring to city-owned cellular phones, laptop computers and cars in particular, for which there is no specific policies.
He mentioned, as an example, the risk of laptops catching viruses when used to access the internet from their homes.
Another potential problem that was pointed out is a credit card, in the city’s name, issued to someone with the public library who uses the card to purchase books. While there haven’t been any problems concerning this credit card, Elmore pointed out that “identity theft is always a possibility,” and that they should remove the city’s name from the account or come up with a new method of handling the purchases.
“We were told that we couldn’t establish credit with these big book sellers without a credit card,” explained Teaster. Mayor Ralph Chance said that it was the only credit card in the city’s name.
In going over the executive summary portion of the audit, Lowe said that “a majority of the city’s expenses were related to the Department of Tourism which towers over other expenses.”
On the other hand, a majority of the taxes collected can be attributed to the tourism industry, said Lowe.
In regards to risks involved in city investments, the auditors recommended that the city draw up narrow policies on their investments “instead of doing whatever the state says,” said Lowe.
Elaborating on this, Elmore advised spreading money across investments, so as not to have all the eggs in one basket, so to speak. “It wouldn’t hurt to take that money and spread it around a little,” Elmore stated.This was the first annual audit for Clabo who took over this year for his predecessor Elise “Beige” Cole who had served in the position for over 19 years before retiring.
“Dennis was very helpful in this process,” said Elmore, “and it’s always nice to have people who are willing to help.”
In closing, Elmore emphasized that the audit went smoothly, and that “the things we’ve suggested are easily fixable,” besides working new salaries into the budget.
Vice Mayor Howard Sexton made a motion to approve the audit which was seconded by commissioner Joyce Brackins. Elmore said that the audit would be promptly mailed to the state this afternoon.