State Audit Raises Questions About Handling Of Needy Child Fund By East Ridge Fire Chief Williams

  • Thursday, December 15, 2016

Tennessee Comptroller Justin P. Wilson is raising questions about the administration of a fund in East Ridge that is supposed to help families in need, particularly children during Christmas.

The city of East Ridge in Hamilton County supports its Needy Child Fund through donations and fundraising activities. In 2015, the city’s Fire Rescue Department operated Santa’s Village at a city park, where vendors sold various Christmas goods and other items. Sales from Santa’s Village served as the primary revenue source for the Needy Child Fund.

East Ridge Fire Chief Mike Williams, who is also the former interim city manager, was responsible for receiving collections, counting money, and making deposits from Santa’s Village sales.

Comptroller investigators determined that Chief Williams failed to deposit $9,442.26 in cash from Santa’s Village until May 27, 2016, which was 146 days after Santa’s Village closed. Comptroller investigators contacted Williams on May 26, 2016 to inquire about the Needy Child Fund. He said he had forgotten about the cash, which he claimed was mistakenly left in a locked safe within his city-issued vehicle.

Comptroller investigators noted that Chief Williams deposited Needy Child Fund checks in 2016 on Jan. 6, 11, and Feb. 2; however, he did not deposit the cash until May 27, 2016.

Investigators also found problems with missing vendor contracts, inappropriate cash disbursements made from Santa’s Village collections, lack of documentation for credit card transactions, and a failure to maintain inventory records for items purchased for resale at Santa’s Village.

 

“Sound public policy dictates the importance of separating money handling responsibilities between more than one person,” said Comptroller Justin P. Wilson. “When multiple people are involved in this process, it reduces the chance of error or unauthorized activity.”

East Ridge officials said steps have been taken to deal with the audit findings.

Officials said:

  • The city of East Ridge welcomes the audit and findings of the Tennessee State Comptroller regarding the Needy Child Fund.
  • The Needy Child Fund is a well-known, respected effort by employees to help less fortunate citizens in East Ridge, especially around the Christmas season.
  • The audit found no intentional wrongdoing by any employee of East Ridge.
  • City Manager J. Scott Miller and the City Council have already taken the necessary steps to address audit findings. Those corrections are:
    • Creating a separate, non-profit 501-C (3) organization to oversee the fund with an independent board. A filing has already been submitted to the state and four local board members have already been identified. 
    • In June 2016, the City adopted and implemented uniform accounting systems and internal controls as required by state law. The East Ridge Internal Control Manual has already been discussed with all appropriate departments inside City government. These internal control standards are currently being followed by all City departments.

The Internal Control Manual addresses how to properly document and deposit funds, provide receipts, prepare rental contracts, make disbursements and maintain inventory.

-   The new 501-C (3) organization will create separation of the Needy Child Fund from the City and its employees. As soon as the organization is fully formed, it will develop a new mission statement that describes it purpose and use of collected funds.

·         This year, items purchased by the fund will help more than 50 needy children in East Ridge. Items purchased include toys, clothing, diapers, car seats and hygiene items. Other money was spent on the logistical needs of producing the Santa Village (i.e. tents, decorations) as well as purchasing items for resale such as Christmas ornaments and an assortment of Christmas toys. In one case, nearly $4,000 was spent to meet an urgent medical need for one family.

The Needy Child Fund identifies needy families though an application process, Facebook and word of mouth. Applications are sent to local school guidance counselors, who are in the best position to identify need families. All applicants are evaluated and, if needed, a home visit is done to verify the need.

·         “The Needy Child Fund is an institution in East Ridge that has met many urgent needs for our citizens over the decades it has been in existence,” said East Ridge Mayor Brent Lambert. “We look forward to making the Needy Child Fund even more successful in the years ahead.”

·         “Our goal is to operate all departments in the City of East Ridge as efficient as efficiently as possible, and we will do that,” said City Manager J. Scott Miller.

To view the investigation online, go to: http://www.comptroller.tn.gov/ia/
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