A state audit of the Mercer County Fiscal Court found that the county did not have an effective purchase order system, did not comply with bidding requirements and did not have adequate controls in place over payroll.
The first and third are repeat findings, which have been noted in previous county audits.
The audit, which is required by state law, covers the fiscal year which ended June 30, 2017. The auditor must comment on noncompliance with laws, regulations, contracts, and grants. The auditor must also comment on material weaknesses involving internal control over financial operations and reporting.
The auditors found the Fiscal Court did not have an effective purchase order system. They noted that 23 of 64 invoices tested did not have a purchase order, with examples of purchases being asphalt, elevator maintenance and reimbursement for conference hotel expenses. Eleven of the disbursements were for utilities.
Auditors also found the county paid two invoices for asphalt that did not use bid prices, which resulted in an overpayment of $2,809.
In a comment on the auditor’s report, Mercer County Judge-Executive Milward Dedman said by the end of fiscal year 2016-2017, the county began issuing purchase orders for all purchases, utility bills, payrolls “and anything else that requires a check to be written.”
Dedman said all departments have been made aware that they must call for a purchase order before making any purchases.
He said the asphalt invoices were for blacktopping a parking lot at Anderson-Dean Community Park.
“The company who paves our county roads had a third party perform the work, due to their equipment being too large for the park,” Dedman said. “We were unaware there was a difference in pricing, but will check pricing in the future.”
Dedman later told the Harrodsburg Herald that the audit does not reflect the county’s current financial policies or position.
“By the time we get the audit from the year before, we’ve corrected everything,” he said. “That’s why I hate having audits so late. It messes your next year up.”
The auditors also found the fiscal court did not comply with bidding requirements as mandated by state law.
They noted there were two purchases that should have been bid by the fiscal court.
One purchase was for a forklift for the county landfill, totaling $41,889. The second purchase was for three leased tractors with mowers.
The purchase price for all three tractors combined totaled $345,227, which includes a down payment of $58,427 and trade-in value of $52,000.
Auditors noted internal controls were not in place to ensure that purchases and leases exceeding $20,000 were bid out prior to purchase.
Judge Dedman said the fiscal court joined the National Joint Powers Alliance under the impression that membership enabled the county to make purchases that fulfilled the procurement process required by state law. This membership was used for the purchase of the tractors.
Dedman said the forklift was purchased using funds from a solid waste grant.
“The Kentucky Division of Solid Waste asked for a quote on the forklift and approved the grant,” he said. “I didn’t think about getting three estimates because we were spending a grant.”
He said Mercer County will follow state requirements in the future and make certain all purchases of $20,000 or more are competitively bid per out.
Finally, the auditors found the Fiscal Court did not have adequate controls in place over payroll, another repeat finding from the 2016 audit. Auditors noted the finance officer is responsible for handling payroll for the fiscal court while the tax administrator reviews payroll summary reports and compares to timecards for accuracy.
Judge Dedman said the Fiscal Court was doing the best they could with limited staff.
“We’re doing everything we can possibly do barring hiring more employees to check everything that’s been done,” he said. “Everything’s being checked, but not enough for the auditors.”
Over all, Dedman said he was pleased with this year’s audit.
“All the money was in order,” he said.
To learn more, check out this week’s issue of the Harrodsburg Herald.