Accounting firm Dixon Hughes presented its review of the Jackson Economic Development Commissions’ records to county commissioners last Tuesday (Feb. 8), revealing a handful of inconsistencies, but nothing so damning as missing monies.

Accountant Mitchell Crisp said of the 37 disbursements the firm tracked, all but two of the transactions could be traced back to supporting documentation.

Crisp also said that of these transactions there was one instance of a check having been written with only one signature. EDC policy dictates that two signatures are required on each check issued.

Crisp did not clarify which two transactions did not have supporting documentation, nor to whom the check with only one signature was written.

In addition to these discrepancies, Crisp found three instances in which EDC actions do not appear to match EDC board minutes.

The first such instance was the June 10, 2001, decision to loan the Jackson Development Corporation $568,000 for the purchase of the Tuckasegee Mills property.

Crisp said that board minutes indicate that the EDC would hold a first deed of trust to the property; however, the deed languished for two months before it was recorded.

Tom Miller, an attorney with the N.C. Real Estate Commission, said that a delay is “not necessarily indicative of a problem,” however, in this case the delay placed the EDC second in line behind Triple S Partnership – the group that sold the JDC the property. In addition to the $568,000 loan, Triple S financed the deal for $250,000 and has begun foreclosure proceedings against the JDC, threatening the group’s hold on the property.

“The EDC chairman (Tom McClure) states that the board approved the completion of the transaction as a second mortgage,” Crisp’s report states.

However, Crisp wrote that minutes for the meeting where the second mortgage status supposedly was discussed could not be found.

“This issue is significant due to the greater risk of loss created by taking a second position,” Crisp’s report states. “In the event of foreclosure by the first mortgage holder, the EDC would be required to increase its investment in order to protect its position.”

The second instance of EDC actions not matching up with board minutes involved approval of a financial consultant to assist QC Apparel for a period of six months at a cost of $25,000. Over a four-month period from Dec. 3, 2002, to March, 31, 2003, a total of $33,000 was paid out to this consultant, Crisp’s report states.

“Approval for the additional $8,000 payment made as a grant to QC Apparel could not be located in board minutes,” Crisp wrote.

Finally, Crisp noted a $10,000 disbursement made to the Office of Regional Affairs on June 26, 2001, in payment for secretarial support. Though the amount paid out was within the EDC budget, no contract with the Office of Regional Affairs could be located, Crisp wrote. EDC Chairman Tom McClure works full-time as the Director of the Office of Regional Affairs, a division of Western Carolina University.

In none of the three instances where EDC actions did not match EDC minutes did Crisp say if the actions or perhaps the minutes themselves were wrong.

Commissioners did not discuss Crisp’s report in great detail, saying the issue would be revisited at Tuesday’s meeting (Feb. 15) — once they had actually read the report.

However, Crisp’s presentation gave rise to two new issues — that he was never contract to perform and audit and that the records review was done under the supposition that the county holds authority over the EDC.

“We were not engaged to, and did not, conduct an audit, the objective of which would be the expression of an opinion on the financial statements of the Jackson Economic Development Commission or the Jackson County Revolving Loan Fund,” Crisp’s cover letter to the report states.

Rather, the records review procedure was agreed upon by the firm and county commissioners. The firm was to match monies in with monies out and cross-reference EDC actions with the group’s meeting minutes.

Throughout his report to commissioners Crisp commented on transactions like the EDC to JDC financing arrangement for the Tuckasegee Mills property, saying it was marred by “an inherent conflict of interest issue” because McClure is chairman of both groups. To remove this conflict Crisp recommended that the same group of people promoting job growth in the county should not be monitoring the county’s revolving loans. In addition to his post as JDC chair, McClure also served as the chair of the revolving loan committee.

Also, Crisp said that the EDC’s sponsoring governments should take action to bring the EDC into compliance with its own bylaws, submitting to an annual audit and issuing reports to each participating entity. All financial reporting of EDC actions should be consistent and timely and if these tasks cannot be accomplished, Crisp said he would “urge” the EDC to consider whether members are up to effectively accomplishing the group’s goals.

Bearing witness to the county’s interests, Crisp also said it was inappropriate for a county employee — Tamara Crisp — to have contracted services with the JDC.

“We need to get the county out of that arrangement,” Crisp said.

Whether such comments fall under the realm of an opinion issued regarding the EDC and revolving fund’s financial records or the situation itself was unclear.

Also of note is Crisp’s cover letter statement that, “Jackson County’s management is responsible for the oversight and management of the Jackson Economic Development Commission and the Jackson County Revolving Loan Fund.”

At no time, however, has the county commissioner’s authority as overseer and manager of the EDC been established. The EDC is comprised of representatives from the towns of Forest Hills, Dillsboro, Sylva and Webster, as well as county government, Western Carolina University and Southwestern Community College. Though the county contributes almost all of the EDC’s budget and holds three seats on the board, bylaws do not give those representatives any greater weight than their counterparts. Furthermore, the county has suspended all its activity involving the EDC.

Meanwhile, County Commission Chairman Stacy Buchanan asked Crisp to come up with a recommended method of operation for conducting revolving loan fund business. Though Crisp referred commissioners back to the documents that originally permitted the formation of the fund, he agreed to submit additional recommendations.