March 7, 2014
That is the best way to sum up the results of the 2012 audit for Harlan Fiscal Court released by the State Auditor’s Office earlier this week.
Judge-Executive Joe Grieshop and each member of the fiscal court must be open and forthcoming in their work to address the findings, which in our opinion, call for a major overhaul on how county finances are handled, who handles them, and on how our county government does business. The audit does not set a good example for business practices and demands diligent and immediate response.
Taxpayers expect elected officials to be good stewards of their hard-earned dollars. However, the fact the auditor did not express an opinion in and of itself dictates changes must occur. The report dictates the fiscal court take responsibility and address the items one by one; enacting policies, procedures and additional checks and balances to prevent future problems. The fact that previously cited problems had not been corrected creates added concern.
“Therefore we will issue a disclaimer of opinion,” reads the report. This is not good for Harlan County and its citizens. Future potential business and industry prospects that might consider locating here may well go elsewhere.
A sampling of the items cited demands Grieshop and the fiscal court take immediate and stern action to address the findings. The fiscal court is ultimately responsible and accountable for the audit. Some of the findings included:
• Confusion created by maintaining a lone bank account;
• Quarterly reports not being filed with the state as required;
• Inconsistent accounting methods;
• Inaccurate reporting;
• Inadequate reconciliation of financial documents;
• Inability for auditors to perform additional procedures to overcome the fraud risk noted;
• Failure to make timely deposits of substantial sums of money;
• Failure to record millions of dollars of debt-financing obligations;
• Checks being voided and reissued creating potential for budget manipulation;
• Quarterly report cash not reconcilable with detailed general ledger cash by $2.7 million;
• Quarterly report not reconciling to bank statements by $3.9 million;
• Failure to have two signatures on county-issued checks, such as one written for $20,000 and signed only by the judge-executive;
• A test of 170 invoices found seven had no documentation to support the expenditure, six were not paid within 30 days as required, four did not agree with the amount paid, 34 were not charged to the correct budget line item, and 25 exceeded $20,000, which prevented the auditor from determining if bidding procedures were followed.
One of the first items in the audit states: “The Fiscal Court lack controls over the overall environment of the county.” With difficult economic times facing us, the fact that “prior year recommendations made concerning controls were not addressed or implemented” is indeed serious.
Each magistrate must demand and work to adopt and implement the policies and procedures required to be compliant. This must happen to best utilize our county’s limited resources. We ask that you do so in open court, preferably in evening sessions, where voters can come and see you at work on such important matters.
We are confident the judge-executive and the fiscal court would never conduct their personal business in the manner cited in the audit.
Furthermore, to regain public trust, it is vital the judge-executive and fiscal court immediately refer parts of the audit to the Cumberland Valley Area Development District’s Ethics Board. Conflicts of interest are serious and should be taken as such. The court must ensure that all work of the “county engineer” requiring procurement or bidding be done in order to assure the best value for the county. As the county’s incomes decrease, this becomes more vital each day.
Simply stated, so many of the findings indicate our county government’s finances were unauditable due to the practices in place and inadequate checks and balances. The audit stopped short of alleging any criminal activity, but contains many findings that clearly leave us shaking our heads and asking how some of this happened.
We encourage you to view the audit report in its entirety on the State auditor’s website. http://apps.auditor.ky.gov/Public/Audit_Reports/Archive/2012HarlanFCaudit.pdf. These are your tax dollars addressed in this report.