An Institute for Public Service training program continues to reap dividends, according to a recent study.
In 2018, the institute, through its County Technical Assistance Service, partnered with the Tennessee Comptroller’s Division of Local Government Audit, to launch a program to train those working in finance for counties. Through 11 courses, the County Certified Finance Officer (CCFO) classes cover topics such as budgeting, purchasing, payroll, capital and debt management, internal controls, governmental accounting and financial reporting.
A recently completed study found that county audit findings fell 25 percent from a five-year average of 475 to 357. The 475 average was from fiscal year 2015 to fiscal year 2019, and the 357 average was from fiscal year 2020 to fiscal year 2024. That decline coincided with the establishment of the finance officer program.
“From cybersecurity threats to supply chain shortages and the recruitment and retention of good staff, there are constant threats. County leaders should view training costs as an investment in their people and organization rather than an expenditure,” says John Sutton, CTAS County Certified Finance Officer program manager. “This study, conducted by our CCFO team, found that audit findings decreased as the number of certified finance officers increased, and they decreased with a centralized accounting structure in the county.”
The decline also was sharper for the most serious audit findings—material weaknesses and significant deficiencies dropped from 283 to 188 in the same time frame.
In fiscal year 2020, 160 county employees had completed the program. That number had grown to more than 500 by fiscal year 2024.
While audit findings declined, the study found that counties with centralized accounting have fewer audit findings than counties with partially centralized or noncentralized accounting. Fully centralized is when one finance department manages all three main county departments’ finances, including the mayor’s office, road department and school system. Under partial centralization, the county finance director oversees the finances of the mayor’s office and road department, while the schools operate separately. With non-centralization, the mayor’s office, road department and school system have three different finance departments.
Fifty-six percent of Tennessee counties operate full or partial centralized accounting structures; 44 percent remain noncentralized. Non-centralized counties consistently had far higher findings: a fiveyear average of 7.0 findings (FY 2015–FY 2019) and 4.9 (FY 2020–FY 2024), versus 3.5 and 2.8 for fully centralized and 3.0 and 2.8 for partially centralized counties. Smaller counties, specifically those with non-centralized accounting systems, produced 61 percent and 59 percent more audit findings than centralized peers across the two periods.
Reported fraud across the 10-year period totaled $6.12 million from 131 cases. Counties with non-centralized finance structures accounted for 58 percent of total dollar losses. The five largest individual cases, totaling more than $3.9 million, resulted from no separation of duties and lack of management oversight, reinforcing that accounting structure and staffing gaps increase fraud risk, Sutton says.
Accounting structures matter, as does training of finance staff, according to the study findings.
Cannon County changed from noncentralized to fully centralized in 2021. The county eliminated all audit findings within four years. It also grew its general fund balance from $2.2 million to $3.8 million. It has three CCFO graduates on staff and earned four clean audit awards.
“The CCFO training program was invaluable as our small county was changing from a non-centralized to a fully centralized accounting system under the 1981 Financial Management System Act. As finance director, the program helped me better prepare for the transition,” says Cannon County Finance Director Diane Hickman. “I highly recommend the CCFO program to all counties, no matter the size or structure.”
