Finding Text
The Lawrence County Fiscal Court Failed To Implement Effective Internal Controls Over Federally Reimbursed Expenditures And Circumvented Internal Controls By Performing A Split Purchase Federal Program: Assistance Listing #: 21.027 COVID-19 - Coronavirus State and Local Fiscal Recovery Funds Award Number and Year - 2022 Name of Federal Agency: U.S. Department of the Treasury Compliance Requirements; Procurement, Suspension, and Debarment Type of Finding: Material Weakness and Noncompliance Amount of Questioned Costs: $64,999 Opinion Modification: Yes, Qualified COVID Related: Yes The Lawrence County Fiscal Court paid $29,999 to a vendor for inflatables and associated items for the Lawrence County Cove project. This vendor was paid an additional $5,000 on the same day for other items applicable to the cove project for a total of $34,999. In addition, the fiscal court also made a payment of $30,000 to another vendor for the renting of equipment which is also a violation of the ethics code as discussed in finding 2022-002 and 2022-005. There was a total of $64,999 in purchases with federal funds that were not advertised or opened for bid in accordance with KRS 424.260. Additionally, vendors were not checked to see if they were debarred or suspended. The fiscal court circumvented internal controls by making split payments to the vendor for less than $30,000. The county issued separate payments to the vendor so that bidding would not be required. The county also failed to advertise or open a bid for the inflatables cove project and the rental of the dozer. The county failed to follow proper procurement procedures which results in a noncompliance with state laws and federal regulations and is at risk for extensive federal oversight and repayment of questioned costs. The version of KRS 424.260(1) in effect at the time of the subject expenditures stated, ?[e]xcept where a statute specifically fixes a larger sum as the minimum for a requirement of advertisement for bids, no city, county, or district, or board or commission of a city or county, or sheriff or county clerk, may make a contract, lease, or other agreement for: (a) Materials; (b) Supplies, except perishable foods such as meat, poultry, fish, egg products, fresh vegetables, and fresh fruits; (c) Equipment; or (d) Contractual services other than professional; involving an expenditure of more than thirty thousand dollars ($30,000) without first making newspaper advertisement for bids.? 2 CFR ?200.318(a) requires, ?[t]he non-Federal entity must have and use documented procurement procedures, consistent with State, local, and tribal laws and regulations and the standards of this section, for the acquisition of property or services required under a Federal award or subaward. The non-Federal entity's documented procurement procedures must conform to the procurement standards identified in ? 200.317 through 200.327.? We recommend all expenditures of $30,000 or more be bid in accordance with KRS 424.260(1). Purchases should not be split in order to avoid bid requirements. The fiscal court and management should also abide by the requirements of 2 CFR ?200.318(a) by adhering to their own policies and procedures for procurement of projects.