Report raises concerns about East Ridge Needy Child Fund

justin wilson tennessee comptroller
justin wilson tennessee comptroller

In a report Thursday, state Comptroller Justin P. Wilson concluded that East Ridge Fire Chief Mike Williams failed to follow proper procedures to account for money raised for the town's Needy Child Fund.

Williams was the sole official responsible for collecting, counting and depositing most of the funds, the report said.

He did not deposit more than $9,442 in cash until nearly five months after the event, the report said, although he deposited checks within a few days.

Williams said he had forgotten the cash was locked in a safe in his city-issued vehicle. He deposited the money on May 27, a day after being contacted by the comptroller's office, according to the report.

Tennessee law requires that public monies be deposited within three days after they are received, the comptroller said.

The report also said Williams was unable to provide copies of contracts with vendors who sold merchandise at the town's Santa's Village fundraising event, which was run by the town's Fire Rescue Department. Between 20 and 25 vendors paid $50 per week to operate a booth at the Village, the report said, but Williams said he waived the fee if a vendor could show financial distress.

Williams also said he did not require a vendor to sign a contract "if he knew the vendor well," the report said.

The Fire Rescue Department also operated a booth at the Village selling what the report called trinket items. The report said there was no inventory to determine how many items were sold at the booth.

The comptroller's office also said that numbered receipts were not issued for any of the money that was collected, as required by state law.

"Due to the absence of official prenumbered receipts, we were unable to determine whether Santa's Village collections were accounted for properly," the report said.

The comptroller's office also criticized Williams for not involving other officials in handling the funds raised.

"Chief Williams received collections, counted collections, made deposits, was custodian over assets, and made cash disbursements from the collections," the report said, "a significant deficiency in internal controls that increases the risk of unauthorized transactions."

The Needy Child Fund had set up a separate bank account for the fund. Total deposits for 2014-15 were $35,338.55 and $28,169.40 in 2015-16. Williams blamed the decline of $7,169.15 on flooding and bad weather that lowered attendance in 2015-16.

East Ridge officials responded to the report, noting that it did not accuse Williams or anyone else of misappropriating funds.

They said the comptroller's recommendation that more formal procedures be established for managing the Needy Child Fund have been adopted.

A nonprofit 501c(3) organization is being created to oversee the fund, according to a news release from the city, and the city adopted an internal control manual with rules on "how to properly document and deposit funds, provide receipts, prepare rental contracts, make disbursements and maintain inventory."

City officials said the fund had provided "toys, clothing, diapers, car seats, and hygiene items" to more than 50 children, while "nearly $4,000 was spent to meet an urgent medical need for one family."

"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," East Ridge Mayor Brent Lambert said.

Contact staff writer Steve Johnson at 423-757-6673, sjohnson@timesfreepress.com, on Twitter @stevejohnsonTFP, and on Facebook, www.facebook.com/noogahealth.

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