The Tennessee Comptroller of the Treasury has released the audit report of the Public Building Authority (PBA) for Fiscal Year 2018-2019. PBA owns and manages the Manchester-Coffee County Conference Center.

According to the audit, the conference center suffered a net operating loss of nearly $340,000 in FY2019. Coffee County and Manchester City cover the loss equally.

Issues corrected

The PBA has corrected five of the seven issues, referred to as findings that existed FY2018. Two of the previous findings continue to exist.

The findings that have been corrected are related to: segregation of duties; authorized signatures; controls over disbursements; surplus fixed assets; and receipts.

The issues that still exist are budget and net operating loss.

Budget

“We noted that actual expenditures exceeded the amount appropriated in the budget in the general fund,” auditors said. “This practice is contrary to state statutes, which require all expenditures of the general and special revenue funds to be authorized by the governing body. Without following proper procedures, the organization has not authorized all expenditures by the end of the fiscal year.”

The auditors recommended that all expenditures should be authorized in either the original budget or an amendment to that budget or in a supplemental appropriation.

PBA members replied that the conference center’s management will continue to develop a comprehensive budget approved by PBA.

“All efforts will be made to stay within the parameters of the initial budget with amendments approved when necessary. Current efforts are underway to collect funds or revenue from other sources besides the General Fund.”

Net operating loss

“During the current fiscal year, the district suffered a net operating loss of $339,764.14. State statutes require proprietary funds to prescribe rates sufficient to pay all expenses of operations. Continued losses could affect the Organization’s ability to continue to meet its obligations as they become due,” the report states.

The auditors recommended that “care should be taken to ensure the Conference Center operates at a break-even point in the future.”

The PBA replied to this recommendation, saying, “Priority measures with accountability requirements have been implemented to work within budget and decrease net losses. Also, periodic meetings are held between board and staff to ensure opportunities for revenue streams are not overlooked. Price evaluations are done twice yearly and whenever market rate requires change. Profit per item/event is reviewed weekly with a board member. Revenue streams from other sources are also currently being evaluated. All effort towards sustainability and market value are being evaluated regularly.”

The audit report was prepared by Bean, Rhoton & Kelley, PLLC.

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