Judge Executive Vows Change After Second Straight Scathing Audit

For the second consecutive year, state auditors were critical of the Union County Fiscal Court's failure to oversee, monitor and verify the county's financial bookkeeping. Among the issues were poor records management, two bungled federal grants and the failure to pay two county employees overtime.

The audit encompassed the 2015 fiscal year, which started July 1, 2014 and ended June 30, 2015. A previous audit for the 2014 fiscal year was also critical of the county's bookkeeping, outlining similar issues that were contained in the 2015 fiscal year audit which was released on Wednesday.

The 2015 fiscal year audit contained 15 findings, which was three times as many as the audit from the previous fiscal year.

"We had 15 findings which is substantial," said State Auditor Mike Harmon on Wednesday afternoon. "I don't know if sloppy is the right word but there are a lot of things that need to be corrected."

The 15 findings that state auditors noted largely centered around the fiscal court's failure to implement segregation of duties, which provide oversight, and a lack of internal controls.

Segregation of duties provide protection from possible misappropriation of taxpayer money while internal controls can include thorough reviews of receipts and other financial documents by someone who is independent of the county treasurer.

State auditors found a lack of segregation of duties over cash receipts, disbursements, transaction posting and bank reconciliations. Auditors noted that there is no oversight of the treasurer's duties, allowing errors to go undetected and uncorrected. For example, Treasurer Lissa Gibson deposited federal loan funds into the county road fund, according to the audit.

Internal controls over disbursements and county credit cards were weak, state auditors said. The fiscal court did not maintain proper supporting documentation for every credit card transaction. Auditors said records were missing for two travel vouchers and documentation for three other disbursements were missing, according to the audit. Judge Executive Jody Jenkins told auditors that internal controls have already been established and implemented, including the verification of all invoices. Once all claims are prepared, a finance committee reviews every claim and receipt prior to the fiscal court's approval, Jenkins said.

The fiscal court failed to follow proper purchasing procedures for multiple purchases, according to the audit. For four purchases, the county failed to provide documentation of quotes or bids being obtained, the audit states. This is in violation of the county's own administrative codes. Jenkins told auditors that all claims over a certain threshold must be accompanied by three quotes or bids.

Auditors also noted that the fiscal court failed to implement internal controls over payroll and failed to properly compensate employees for working overtime in addition to properly accounting for employee hours worked. Among the issues auditors found were FICA withholdings not calculated properly; timecards that went unsigned; health insurance invoices not agreeing with contributions stated by the fiscal court and the failure to properly compensate two employees for working overtime.

State auditors also found the county treasurer, Lissa Gibson, did not clock in but was paid the full salary without using leave time, such as a vacation or sick day. This happened 20 times, auditors said. Jenkins responded to the auditor's findings by saying that his office and others are going to properly verified and rectified. Also, all missed days are going to be documented in the electronic time clock system.

"Based on this particular situation in this particular audit, it does appear that they have a great deal of room for improvement," Harmon said. 

When asked if Union County taxpayers should be concerned about their county's financial health and record keeping, Harmon said they should get involved in their local government.

"I think it's important  that every citizen be involved and hold their elected official accountable, including myself," Harmon said. "If [the fiscal court fails to correct the issues], then the citizens of the county should consider whether or not they want to hold them accountable in any type of next election."

Then, there were the issues with two large sized federal grants. Auditors said the fiscal court failed to implement internal controls that are adequate to ensure the schedule of expenditures of federal awards is accurately prepared. Auditors said no one reviews the county treasurer's work for accuracy, which allowed available grant money to be overstated by tens of thousands of dollars. Because of some of the accounting errors, the county could not meet the grant's deadline of March 30th, 2016, the audit states. Failing to meet the deadline could affect the fiscal court's ability to receive future federal assistance.

Auditors also noted some of the same vendor payments were submitted to two different government agencies, among other issues related to records management.

"As part of this particular audit, there were a little over $500,000 that -- for a lack of better words -- were left on the table because they didn't file the paperwork correctly," Harmon said. "I don't know about you but a half-million dollars is a lot of money. They could potentially still be able to access those grants but at the same time if they don't, that is  money that is lost for that particular county."

According to the audit, some contractors working on the grant-related project weren't paid on time. There was one instance in which a vendor was paid four months prior to the project's final inspection. Not only can these issues put the county at risk of not receiving federal grants in the future, but the federal government can disallow or deny payment because the county failed to stay in compliance with the grant, Harmon said.

In his response to the auditor's findings, Jenkins said the county will request proposals from outside consultants and / or certified public accountants to monitor current or future grant programs.

Jenkins did not respond to Eyewitness News' attempts to reach him for comment.

*** 

Among the auditors findings were:

The Fiscal Court Lacks Segregation Of Duties Over Cash Receipts, Disbursements, Transaction Posting, And Bank Reconciliations

Internal Controls Over Disbursements And Credit Cards Were Weak

The Fiscal Court Failed To Follow Proper Purchasing Procedures For Small Contracts And Purchases

The Fiscal Court Failed To Spend Coal Severance Funds Properly

The Fiscal Court Did Not Implement Internal Controls Over Payroll, Properly Compensate Employees For Overtime, And Properly Account For Hours Worked

The Union County Jail Lacks Adequate Segregation Of Duties Over The Accounting Functions

The Union County Jail Did Not Make Daily Deposits

The Jailer Did Not Submit An Accurate Year-End Commissary Report To The County Treasurer

The Fiscal Court Failed To Maintain Adequate Internal Controls Over Capital Asset Record Maintenance

The Fiscal Court Lacks Adequate Controls Over The Off-Site Receipt Collections And Deposits

The Fiscal Court Failed To Implement Internal Controls That Are Adequate To Ensure The Schedule Of Expenditures Of Federal Awards Is Accurately Prepared

The Fiscal Court Failed To Implement Adequate Internal Controls Over Accounting Records Of Federal Programs

The Fiscal Court Failed To Implement Adequate Internal Controls Over Procurement, Suspension, And Debarment

The Fiscal Court Failed To Implement Adequate Internal Controls Over Davis Bacon Requirements And Had $57,202 Of Questioned Labor Costs

The Fiscal Court Failed To Implement Adequate Internal Controls Over Procurement, Suspension, And Debarment 

Auditors also included a statement that was critical of the county's less-than-clear financial condition. 

"In our opinion, because of the significance of the matter discussed in the Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles paragraph, the financial statement referred to above does not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of the Union County Fiscal Court as of June 30, 2015, or changes in financial position or cash flows thereof for the year then ended."

Click here to see the state audit report.

 


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