Finding Text
Federal Program: Assistance Listing # 97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters) Award Number and Year: 4428 PW# 493 2019 Name of Federal Agency and Pass-Thru Agency (if applicable): U.S. Department of Homeland Security and Kentucky Emergency Management Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs/Cost Principles; Matching, Level of Effort, Earmarking; Period of Performance; Reporting; Special Tests & Provisions Type of Finding: (Material Weakness, Noncompliance) Amount of Questioned Costs: $236,464 Opinion Modification (if applicable): Disclaimer COVID Related: No The Breathitt County Fiscal Court Did Not Establish And Maintain Effective Internal Controls Over Compliance With FEMA Requirements: Federal Emergency Management Agency (FEMA) requirements. Purchase orders were not consistently used for the approval and tracking of federal expenditures. Transactions requiring bids were not presented to the fiscal court for approval. From the sample of 11 invoices tested there were nine instances of noncompliance and lack of controls over compliance regarding purchase orders and bid approvals. The deficiencies listed occurred due to lack of monitoring of controls, which diminishes the effectiveness of the controls put in place over disbursements by fiscal court. These deficiencies could create errors in recording or allow for the possibility of misappropriation of assets. Transactions were initiated without considering available line item balances and tracking with the use of a purchase order. Items requiring the bid process were not presented to the fiscal court for the approval of bids. Proper internal controls over expenditures are important to ensure purchase orders are created with sufficient funds available, include proper supporting documentation, and are paid in a timely manner. KRS 68.210 gives the state local finance officer the authority to prescribe a uniform system of accounts. Per the County Budget Preparation and State Local Finance Officer Policy Manual, issued by the Department for Local Government (DLG), “[p]urchases shall not be made without approval by the judge/executive (or designee), or a department head.” In addition, according to the fiscal court’s administrative code, transactions exceeding $20,000 are subject to the bidding process. We recommend fiscal court design and implement proper internal controls over compliance with federal program requirements and ensure they are operating effectively.