Luallen Releases Audit of See the audit report for Full Details |
Crit Luallen |
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(Frankfort - May 18, 2010)
State Auditor Crit Luallen has released the audit of the financial statements of the Shelby County Fiscal Court for the fiscal year ended June 30, 2009. State law requires annual audits of county fiscal courts.
The audit found that the county’s financial statements, in all material respects, fairly present the county’s assets, liabilities, and equity arising from cash transactions and revenues received and expenditures paid in conformity with the modified cash basis of accounting. As part of the audit process, the Auditor must comment on non-compliance with laws, regulations, contracts and grants. The Auditor must also comment on material weaknesses involving the internal control over financial operations and reporting. The audit contains the following comments: Fiscal Court lacks internal controls over ambulance receipts. During the review of receipts, auditors noted that one employee in the Judge’s office was responsible for billing for the ambulance service, collecting money due for billings, and tracking ambulance accounts receivable. Good internal control dictates the same person should not collect payments and account for receivables. To adequately protect against asset misappropriation and/or inaccurate financial reporting, the audit recommends Fiscal Court implement the following procedures:
The Shelby County Judge/Executive, Rob Rothenburger, responded, “A second person is in training for billing and collecting. A second company has been hired to collect bad debt, when all attempts have been exhausted then the new county ordinance for write offs will be then be put in place. Monies coming into EMS will be received and recorded in a ledger by the receptionist, totaled daily, and given to the Treasurer and/or deputy Co. Judge to balance w/deposit ticket.” The County should maintain complete and accurate capital asset schedules. The county did not have an accurate capital asset schedule for fiscal year ended June 30, 2009. A list of capital asset additions, retirements and disposals were not properly maintained. Prior capital asset errors included donated assets, assets listed twice, and assets that were not listed. This resulted in a prior period adjustment to net assets of ($1,536,711). The Department of Local Government (DLG) requires counties to maintain capital asset records (see DLG County Budget Preparation and State Local Finance Officer Policy Manual pages 55-60), that requires among other things a description of the asset, historical cost, date of acquisition, and useful life of asset. Not maintaining an accurate list of capital assets could cause capital assets to not be insured or paying for insurance for an asset the county no longer owns. The audit recommends a schedule of additions be maintained as assets are purchased to simplify the process of updating the capital asset schedule. The schedule should include the date the asset is acquired, a description of the asset, the vendor name, and the amount. Invoices for asset acquisition and invoices for all other disbursements should be kept on file in a manner that allows retrieval of the original invoice for review and verification as needed by management and auditors. Furthermore, the capital asset listing should be monitored and maintained on a regular basis. As new assets are acquired they should be added to the listing. As equipment is retired or disposed of it should be removed from the listing. The assets added/deleted should also include capital assets purchased or disposed of by the County Sheriff and Clerk. The Fiscal Court should take a physical inventory of its capital assets on a regular basis (such as every two to three years) or at the beginning of a new administration to ensure only active, in-service machinery and equipment is included on the County’s financial statements, and should included assets held by the County Clerk and Sheriff. We also recommend that the County implement policies that will identify and track additions, retirements and disposed assets for the purpose of the capital asset schedule. These procedures will ensure that fixed assets are properly stated and that depreciation is being calculated accurately. The Shelby County Judge/Executive, Rob Rothenburger, responded, “This is in the process of being done.” Federal reimbursement requests should agree to supporting documentation. The County received disaster assistance from FEMA through a Public Assistance grant administered by the State. To receive reimbursement for damages incurred as a result of the remnants of Hurricane Ike (September 08) and the ice storm (January 09), project worksheets were submitted documenting the cost of completing clean-up work. During the review of federal expenditures, several differences were noted between the project worksheets or reimbursement requests and supporting documentation. The project worksheet submitted for Hurricane Ike was overstated by $7,044. Per FEMA guidelines, the County is reimbursed for hours worked and equipment usage based on FEMA’s schedule of equipment rates. The project worksheet documented hours worked by employees, who were on leave according to their timesheets. In addition to hours worked being overstated, equipment usage was also overstated as the project worksheet showed these same employees were using county equipment for disaster clean-up for days that they were on leave. The two project worksheets submitted for the ice storm were understated by $27,310, while other errors overstated the expenditures by $844, netting the total understatement to $26,466. The largest error noted was an incorrect equipment rate used for a dump truck. Per FEMA’s schedule of equipment rates, the dump truck should have been reimbursed at $43 per hour; however, the project worksheet only showed $19 per hour. In addition, auditors noted that hours and equipment usage was documented for an employee on a day that the timesheet showed he was on leave. Auditor also found errors in the calculations performed by the FEMA representative who completes the project worksheet based on the documentation submitted by the County. The audit recommends the County submit corrected project worksheets to recoup the $26,466, since they have not received reimbursement for the ice storm expenses. Because the County received reimbursement for Hurricane Ike expenses in August 2009, they will need to reimburse FEMA the federal portion (75%) for the $7,044 submitted for hours not worked. The audit also recommends the County review project worksheets upon completion to ensure accuracy. The Shelby County Judge/Executive, Rob Rothenburger, responded, “Will work with local, state, and federal EMA to address recommendations.” |
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