KNOXVILLE, Tenn. (WVLT) -- Knox County auditor Richard Walls has released his final version of the Knox County Hospitality Account Audit, and auditor Richard Walls' report indicates the hospitality fund violated state law and the Knox County Charter.

In the audit of the fund used by the Mayor's office "to allow private and corporate donations for events," according the Mayor's response to the audit.

The Knox County auditor says according to the Knox County Charter, "all warrants in payments of obligations be signed by the Mayor."

The Mayor's office responds, saying the Mayor's name was not on the account, because he was not a signatory or an account custodian.

Despite the Mayor's claims that his office "fully complied with all requests for documentation and information from the auditor," the auditor says, "Management was unable to provide all documentation that was requested."

The final version of the Hospitality Account audit says there was a lack of receipts for account transactions. The Mayor's office agrees that receipts should have been maintained, but seems to point the finger at former Knox County Finance Director John Werner, who was the accounts depositor starting in November 2002.

In the management's response to the receipt issue, the Mayor's office says, "Management notes that the custodian of the account was aware of donations and disbursements and was apparently satisfied that both were appropriately observed and monitored."

In the audit, Walls says Hospitality Account donations and expenses were not properly approved or appropriated according to state law, but the Mayor's office cites budget resolutions passed in fiscal years 2006-2007 and 2007-2008 that give the Mayor's office and the hospitality account blanket approval for "grants and gifts in which the County has no match and no future monetary obligation beyond this fiscal period."

Knox County purchasing policy requires that purchases of $10,000 or more be put up for competitive bidding. The auditor says a $15,000 expense was not properly bid, but the Mayor's office argues that the $15,000 was actually two different expenses -- one for $5,220.50 to Moxley-Carmichael Communications, and one to an event vendor for $9,779.50.

However, the auditor says, "The $15,000 expenditure was a single disbursement to a single vendor and as such should comply with bid requirements of the Knox County purchasing regulations."

Read the entire audit CLICK HERE.