The Audit

This afternoon, the Tennessee Comptroller’s Office posted the FY07 Comprehensive Annual Financial Report for Anderson County.  While I haven’t thoroughly examined all 277 pages, I did skip to the "findings" beginning on p. 274.

Expenditures exceeded Commission’s appropriations in six major categories, and the Trustee’s office invested $1,454,042 in a mutual fund, which is a no-no.  Local governments (and school systems) are rather strictly limited in where they’re allowed to invest the public’s money, and while the mutual fund may have had a much sweeter rate of return, it’s also possible to lose money in a mutual fund (just like anything else in the stock market).

I might be able to write this off as a rookie mistake for a new trustee, but I do have some questions.  I’d like to know through whom the fund purchase was made, and whether the person who made the commission on this transactions (yes, securities dealers work on commission, and a $1.4 mil investment would undoubtedly trigger a good one) has any relationship to the Trustee or any other elected official in Anderson County.

More as I find it.

12 Responses to “The Audit”

  1. on 27 Dec 2007 at 8:29 pm girlfriend

    I guess when you say I am 80% sure of what it will cost as our Building and Grants guy has said about the remodeling of the ORUD building you will get the expenditures exceeding the appropriations. We don’t need to approve anything without a contract that the contractor is bound by or change orders approved by County Commission.

    As far as a rookie mistake, I need to see the facts on this one. Sounds a little fishy to me. Making a mistake with $100 is one thing but 1.4 mil. I would think you would check your investments out first and make sure you are doing it properly. Sounds like the garbage in Knox County. As a previous County Commissioner I would think he would know the rules. Will wait for the jury to come in on this one.

  2. on 27 Dec 2007 at 9:33 pm Jacket

    1.4 mil in mutual fund? Holy Cow that is not a rookie mistake, that is a mistake of biblical proportions. No government is allowed to invest in the Stock Market because they can’t “stand the risk”. I hope the Comptroller’s Office is all over this one. Somebody better call CTAS and let them know to add this to training. Wow, I’m amazed.


  3. […] Citizen Netmom’s initial perusal of the brand new audit report leaves her with some concerns: This afternoon, the Tennessee Comptroller’s Office posted the FY07 Comprehensive Annual Financial Report for Anderson County. While I haven’t thoroughly examined all 277 pages, I did skip to the “findings” beginning on p. 274. […]

  4. on 28 Dec 2007 at 2:42 am Stock Market » The Audit

    […] Here’s another interesting post I read today by Citizen Netmom […]

  5. on 28 Dec 2007 at 5:30 am may anderson | News trend site

    […] The Audit […]

  6. on 28 Dec 2007 at 9:29 am Volunteer Voters » The Anderson Audit

    […] Citizen Netmom found some interesting stuff in a state audit of her county: Expenditures exceeded Commission’s appropriations in six major categories, and the Trustee’s office invested $1,454,042 in a mutual fund, which is a no-no. Local governments (and school systems) are rather strictly limited in where they’re allowed to invest the public’s money, and while the mutual fund may have had a much sweeter rate of return, it’s also possible to lose money in a mutual fund (just like anything else in the stock market). […]

  7. on 28 Dec 2007 at 9:46 am daco

    This may be a foolish question, but would one of you financial gurus straighten me out on this one please?
    $1,454,042 was invested in the mutual fund account. The current account balance, according to this auditor’s report, is $466,083. Where is the difference?

  8. on 28 Dec 2007 at 9:47 am daco

    BTW good catch Netmom.

  9. on 28 Dec 2007 at 9:56 am Netmom

    Where is the difference?

    That question is high on my list, too. He may have sold some shares (hopefully, at a profit), but given the behavior of the stock market over the last year, there could have been some loss of principal. Losing two-thirds of it in two months doesn’t seem likely, but it certainly demands answers.

  10. on 28 Dec 2007 at 11:29 am Phil

    Since there is no name of the mutual fund given, it is impossible to say for sure, but my guess is that the fund is not a stock mutual fund.
    There are mutual funds that are more commonly known as “money market funds” that purchase various short term obligations, usually 90 days or less. There are money market funds that only invest in US government debt, as well as those that invest in corporate debt. These are usually very low risk investments that are extremely liquid.
    Since the balance went from $1.4 million to $466,083, it leads me to believe they were (are) using a money market fund. Let’s hope it was a government fund.
    I agree that this is not an authorized investment, but I doubt if someone risked that much in the stock market for funds that were to be liquid assets. The commission for a money market fund is usually zero.
    Since we don’t know anything for sure, I’m just speculating, but I hope it helps.

  11. on 28 Dec 2007 at 11:37 am Phil

    One last thing that I forgot. The value of these funds are $1.00 per share, there is no gain or loss to be made, merely interest.

  12. on 28 Dec 2007 at 2:11 pm voter person

    Wonder about commission paid to broker to invest in the mutual fund.

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