BY PHILL BARNETT
MOUNTAIN CITIZEN
FRANKFORT — The state’s annual audit of Martin County’s Fiscal Court found numerous weaknesses and violations in the court’s financial statement for the fiscal year ended June 30, 2021.
The Fiscal Court failed to properly advertise for bids on three separate purchases totaling $164,928 over the course of the fiscal year and made several errors in reporting the county’s finances and applying for coronavirus relief.
According to the audit conducted by Patrick & Associates LLC on behalf of State Auditor Mike Harmon’s office, “the fiscal court was not in compliance with procurement laws, the county administrative code, and the Budget & Policy Manual issued by the Kentucky Department for Local Government.”
Procurement and Bidding Violations
County purchases over $30,000 must be advertised for bidding according to state law KRS 424.260(1).
Martin County failed to properly bid disbursements and did not advertise for bids on all disbursements.
The audit notes that Martin County Fiscal Court has a history of violating this requirement, which was also cited in the audit for the Fiscal Year ended June 2020.
According to former Martin County Judge/Executive Colby Kirk, the firm that conducted the county’s previous audit advised the fiscal court that they could forgo these procedures during a declared emergency.
“These items occurred during the COVID pandemic,” Kirk said in response to the audit. “The county was not sure how to navigate the isolation restrictions and supply chain issues. We were informed by a trusted party that we could make these purchases without bidding because we were in a declared emergency.”
The purchases in question were for road repairs and technology upgrades for the Martin County Courthouse.
The court submitted the technology upgrade expenses to the Federal COVID-19 Coronavirus Relief Fund for reimbursement. Because the county did not follow proper procurement procedures, the funds were not technically eligible for reimbursement. The audit recommends the county contact the DLG for guidance resolving this issue.
Though Kirk was not Judge/Executive during the audited period and has since resigned, his administration oversaw changes to prevent future violations.
“In the future, when we have questions, we will reach out to the DLG for guidance,” said Kirk. “In addition, we have had additional training and instruction on the procurement process, and we are adding an annual retraining at the monthly department head meeting every January.”
The audit also noted that four purchases made by the court totaling $345,572 were not paid within 30 days, violating KRS 65.140(2) and six purchases were missing purchase orders altogether.
The fiscal court paid $1,097 in late fees in the fiscal year in question.
Budget Violations
The court’s year-end receipts differed from their approved budget of $6,620,378 by $930,613 due to issues with the court’s fourth quarter report.
The needed budget amendments were not properly submitted by court treasurer Susan Hale acknowledging an increase in cash inflow.
Additionally, one of the submitted amendments was incorrect causing the general and federal fund budgets to not balance.
“In June 2022, the process changed,” said Kirk. “The finance officer now confirms that the budget and the other inputs are correct in the quarterly reports. In addition, the fiscal court is in the process of changing to a new software that is designed specifically for government use that will not require a separate input and review for the budget or budget amendments.”
According to the audit, “during the year, there was a debt instrument where the principal and interest was paid on the county’s behalf by another party totaling $18,934.”
Though the instrument is being handled by a third party, because it is held by the county officially, it must be budgeted for and reported on the court’s financial statement.
SEFA Violation
Each fiscal year, fiscal courts are required to report an accurate schedule of expenditures of federal awards (SEFA). The audit found that the Martin County Fiscal Court failed to report $117,739 in federal funding.
According to Kirk, “the treasurer inadvertently did not include the USDA vehicle grants on the SEFA.”
“A new procedure will be in place by Oct. 31, 2022 where the treasurer will generate and maintain a spreadsheet of all Federal grants as the MOAs are executed,” said Kirk. “In addition, the SEFA will be reviewed by both the finance officer and the judge prior to submission to the DLG.”
The audit report can be found on the auditor’s website.