Finding Text
The Lawrence County Fiscal Court Did Not Abide By 2 CFR 200.318(c)(1) Federal Program: Assistance Listing #: 21.027 COVID-19- Coronavirus State and Local Fiscal Recovery Funds and 97.036 Disaster Grants Public Assistance Award Number and Year: 2022 Name of Federal Agency and Pass-Through Agency (if applicable): U.S. Department of the Treasury and U.S Department of Disaster Emergency Management passed through Kentucky Department of Military Affairs Compliance Requirements: Activities Allowed/Allowable Costs Type of Finding: Material Weakness and Noncompliance Amount of Questioned Costs: ALN 21.027 $4,160 (excludes $30,000 included in Finding 2022-004) and ALN 97.036 $92,984 Opinion Modification: Yes, Qualified COVID Related: Yes- ALN 21.027 During testing of ALN 97.036 and ALN 21.027, it was discovered that the Lawrence County Fiscal Court did not have internal controls over disbursements of federal funds. Federal funds were disbursed to a vendor of which the Judge/Executive?s son-in-law is a member and the judge?s brother who is the road foreman for premium pay and as a FEMA applicant agent. Provided below are the totals spent for each assistance listing number: ? ALN 97.036 Vendor Total - $78,961 ? ALN 97.036 Road Foreman Total - $14,023 ? ALN 21.027 Vendor Total - $30,000 (See finding 2022-004) ? ALN 21.027 Road Foreman Total - $4,160 The fiscal court disbursed federal funds to parties with a known relation to the Lawrence County Judge/Executive. The fiscal court is noncompliant with the 2 CFR 200.318(c)(1) and the Lawrence County Ethics Code and is at risk for extensive federal oversight and repayment of questioned costs. 2 CFR 200.318(c)(1) states, ?[t]he Non-Federal entity must maintain written standards of conduct covering conflicts of interest and governing the actions of its employees engaged in the selection, award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by a Federal award if he or she has a real or apparent conflict of interest. Such a conflict of interest would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in or a tangible personal benefit from a firm considered for a contract. The officers, employees, and agents of the non-Federal entity may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or parties to subcontracts. However, non-Federal entities may set standards for situations in which the financial interest is not substantial, or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the non-Federal entity.? County Ethics Code - Section III Standards of Conduct states, ?C. No county government officer or employee shall act his official capacity in any manner where he a member of his immediate family. or a business organization in which he has an Interest. has a direct or indirect financial or personal Involvement that might reasonably be expected to Impair his objectivity or independence of Judgment.? We recommend the fiscal court adhere to the requirements set by federal standards. The fiscal court should refrain from using vendors and employees that could potentially create conflicts of interest when using federal funds. If the fiscal court does choose to involve related parties, it is imperative that the ethics commissions thoroughly review and assess these transactions to ensure transparency and ethical compliance. This finding will be referred to Lawrence County Ethics Commission.