Knox County is expected to receive a clean bill of health from its auditor, but some departments will have problems that will need to be quickly fixed, officials said Tuesday.
If not, they could jeopardize the county's bond rating.
"There will be some findings," said Knox County Finance Director Chris Caldwell, who declined to elaborate. "A government our size will have some findings, but at least everything from 2012 has been cleared."
As it stands, the county's external auditor, Pugh & Company, should finish the Comprehensive Annual Financial Report, or CAFR, by the end of the week. Auditors will then issue local leaders a management letter that provides more insight into the report and list any deficiencies and weaknesses in the county's overall organization structure for fiscal year 2013, which ended June 30.
Deficiencies prevent officials from detecting or correcting a mistake "in a timely manner," Caldwell said. A material weakness is usually a set of deficiencies such that a misstatement won't be prevented.
Despite what problems officials might uncover, the county is expected to receive a report's highest mark – an "unqualified opinion" – which means auditors did not have significant reservations about the information contained in the financial documents.
The county has earned the same mark for more than a decade, and received the "Certificate of Achievement for Excellence in Financial Reporting" from the Government Finance Officers Association of the United States and Canada for almost 20 years.
Last year, though, auditors did ding the county on a number of matters. Some were as minor as failing to use the county logo on receipt statements and others were more serious. For example, the Trustee's Office received a material weakness because the department didn't match up its accounting records with its bank statements each month.
The mistakes have since been corrected, Caldwell said.
"I think people are going to see healthy fund balances, and a continued ability and desire to pay down debt," the finance director added.
The county this summer received an Aa1 rating from Moody's Investors Service and an AA+ from Standard & Poor's, two nationally recognized bond credit ratings agencies. S&P also upgraded the county's financial outlook from "stable" to "positive." These are the best ratings in the county's history and are near the top of the chart.
High ratings typically lead to lower interest rates when governments borrow money. Additionally, businesses wanting to relocate tend to look for areas with high ratings.
The county wrapped up its current fiscal year with $631 million in debt – not counting interest. It closed out its 2012 books with $669 million in debt.
"I think whoever reads the report will know in great detail the financial health of the county and the rating agencies are going to know that we're doing everything above board," Caldwell said.