State Auditor Mike Harmon released the audit of the Trigg County Fiscal Court financial statement for the fiscal year ended June 30, 2016 that found several non-compliances, including inadequate documentation over alcohol tax and transient room tax collections and cash transfers not approved by magistrates.
According to the audit report, Harmon says Trigg County Fiscal Court lacked internal controls over receipt processes and pointed out adequate documentation was not maintained over alcohol tax and transient room tax collections. Both types of receipts were not deposited daily. The auditor found some of the tax returns received were not stamped as to when they were received, which made it impossible to determine when it was received at the courthouse. There were also seven alcohol tax returns and one transient room tax return tested that were never received by the county treasurer, and there was no documentation of follow-up on these missing returns. In addition, there were 11 transient room tax returns that the treasurer stated she had received that could not be located.
Additionally, the auditor reports there were insufficient internal controls implemented over off-site receipts. Fiscal court receives money from the recycling center, sports complex, building rentals, and sports complex concession stand sales; however, receipts were not issued to customers at the recycling center but remitted to the county treasurer on a weekly basis. The sports complex concession stand used a cash register for collecting sales, but the register tapes were not readable and couldn’t be used by the county treasurer to verify sale amounts. Sports complex rental fees are placed on a receipt, however, the audit says the sports complex director doesn’t maintain a record of these rentals as the two copies of the receipts are given to the customer and to the county treasurer.
Other noncompliance items found in the fiscal court audit included lack of internal controls over bank accounts and reconciliations, failure to disclose outstanding debt on quarterly financial statements, inadequate internal controls of payroll, failure of county treasurer to sign all county checks, and inadequate controls over reporting of capital assets.
Harmon says these issues were due to the fact that fiscal court has not implemented internal controls over all areas of the receipt process, and lacked cognizance of the risks associated with these areas without the proper internal controls. He adds fiscal court cannot ensure that all receipts are accounted for properly without adequate documentation and increases the risk of misappropriation of county assets and fraud occurring in these areas.
The auditor recommended fiscal court segregate the duties over the receipts process whenever possible and also recommended fiscal court strengthen internal controls over alcohol tax, transient room tax, and off-site receipts to ensure that these funds are accounted for properly throughtout the entire process.
The auditor also found another noncompliance pertaining to the fiscal courts failure to approve all cash transfers. The audit showed there were four cash transfers made within the funds of the Trigg County Fiscal Court totaling over $359,000. Two cash transfers totaling $250,000 were never approved by fiscal court. One of the two approved cash transfers, in the amount of $29,598, was not approved by magistrates until the transaction had already taken place. The auditor says this was caused by an oversight by the county treasurer and a lack of understanding on the applicable requirements on cash transfers. By not having all cash transfers approved by fiscal court, it might not be able to evaluate the current financial standing of the county. Issues such as lower revenue generation could be overlooked, according to the report.
The auditor recommended fiscal court require the treasurer to obtain fiscal court approval for cash transfers prior to funds being moved from one fund to another.
According to the audit, another noncompliance found was fiscal court did not advertise for bids in accordance with state law. Specifically, the audit pointed out fiscal court failed to follow bidding procedures for the convention center renovation, but rather sent out bids and accepted the lowest bid. However, before the project started, the contractor came back and said he had underbid the project, which prompted fiscal court to throw out all bids. The audit says fiscal court then decided they could get a county employee to act as general contractor and subcontracted out the individual jobs in the project. However more than $20,000 was spent on supplies for this project, which should have been bid.
The auditor says the county judge-executive believed they had accepted bids on this project already and the lowest bid seemed too high at this point, and that it would be best for the taxpayers to have the services performed by county employees. By failing to bid all assets purchased, the auditor says the county is not in compliance with state laws and regulations, and fiscal court cannot ensure they received the best prices on the needed materials.
The audit recommended all purchases greater than $20,000 are bid in accordance with state law and that documentation of the bid process is maintained.
The response on the audit to the non-compliances from Judge-Executive Hollis Alexander says going forward they will take every measure to ensure compliance requirements and they immediately took action to correct all infractions found.
County governments are audited on a yearly basis, with the audits for 2017 and 2018 not yet released. Audits typically take several months to complete.
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