State audit of Madison Fiscal Court finds numerous problems

Madison County Fiscal Court did not have internal controls over certain expenditures and did not comply with bidding requirements, state Auditor Mike Harmon’s office said in an audit released Tuesday.

In addition, the Madison County Battlefield Golf Course manager received golf lesson fees and conducted outside employment during county work hours, the audit said.

Some of the problems cited are related to the theft of money from the Chemical Stockpile Emergency Preparedness Program. Last week, Tamara Phelps, the former finance manager of the county Emergency Management Agency and the CSEPP program, was sentenced to 32 months in prison for the embezzlement of more than $332,000. Her lawyer said she intends to repay the money.

State auditors did not find any additional questionable costs beyond those discovered previously by law enforcement, the audit said.

Auditors questioned costs associated with 60 CSEPP transactions in the amount of $34,489 in federal funds for the fiscal year ending June 30, 2015. Those costs included the purchase of 59 iPads, reimbursement of three out-of-state travel expenses when the employee was clocked in on county property, and repairs to a vehicle that was not owned by the county on three occasions.

CSEPP expenditures “did not receive the same scrutiny when processed for payment as the other departments within the county due to the nature of the program,” the audit says. “The failure to have effective internal controls resulted in the county expending funds for purposes that were not associated with the federal program.”

The auditor’s office recommended that fiscal court strengthen established controls to ensure that all expenditures are properly reviewed and approved to ensure that the spending is valid and allowable.

Madison County Judge-Executive Reagan Taylor was in office less than five months when the thefts were discovered. Taylor said his administration was already in the process of modifying the disbursement process before the identification of the theft, “and since that time has implemented new request and disbursement processes.”

Auditors also found that four purchases exceeding $20,000 were not bid. Those included the purchase of an excavator for $82,500; the purchase of two pickup trucks totaling $24,000; a 2014-19 lease agreement for mowers for the golf course with a total value of $282,435; and a 63-month lease agreement for golf carts for the golf course with a total value of $198,400.

Taylor said the purchases were approved by the previous county administration with the exception of the golf course carts. “While we recognize the finding in this audit will change how we handle leases in the future, we relied on past practices and renewed a lease that had not been identified as an issue in past audits,” Taylor said in a written response to the audit. “We will no longer lease without going through the bidding process.”

The audit noted that the Battlefield Golf Course manager is receiving golf lesson fees and conducting outside employment during county work hours. The county does not have a job description or contract with the employee that documents an arrangement in which the fees would go directly to the manager, the audit says. And there is no account of the total fees paid to the golf course manager.

Taylor said fiscal court will enter into a contract with the golf pro for outside lessons. In addition, he said the county’s human resources department “has implemented clocking in and out for salaried employees to ensure it is reflected that the employee is not on county time when working a second job during their personal time.”

Furthermore, Taylor said, “While these findings will be corrected, the action of the golf pro was in line with how golf courses are managed in the private sector and all actions taken were with the approval of the fiscal court.”

Auditors noted that fiscal court had negative bank balances during the fiscal year. The jail fund was overdrawn eight times and the payroll revolving account was overdrawn seven times.

Taylor said the negative balances were due to transfer of funds. The fiscal court is in “a no-win situation” with the payroll fund because of the time constraint from the time payroll is processed to the time in which it is deducted from the account, Taylor said.

“Fiscal court has never been charged a fee because the bank understands the process, however we are looking at alternative pay dates to extend the payroll process turnaround time,” Taylor said.

This story was originally published April 5, 2016 at 12:42 PM with the headline "State audit of Madison Fiscal Court finds numerous problems."