KNOX COUNTY FISCAL COURT

The Knox County Fiscal Court Failed To Implement Internal Controls To Ensure Costs Submitted For Reimbursement Were For Eligible Expenses Not Already Reimbursed By Other Entities Federal Program: CFDA 21.019 ? CARES - Coronavirus Relief Fund For States Award Number and Year: C187 2020 Name of Federal Agency: U.S. Department of Treasury Pass-Through Agency: Commonwealth of Kentucky, Department for Local Government ? Office of Grants Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs Type of Finding: Material Weakness; Material Noncompliance of Major Program Amount of Questioned Costs: $55,286 Opinion: Adverse The Coronavirus Relief Fund (CRF) was established under section 601 of the Social Security Act to cover costs that are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19). The $150 billion fund is to be used to make payments for specified uses to states, tribal governments, and certain local governments for the program period March 1, 2020 through December 31, 2021. The Compliance Supplement 2020 addendum for U.S. Department of the Treasury for CRF for States, Tribal Governments, and Certain Eligible Local Governments states ?recipients may not use payments from the Fund to cover expenditures for which they will receive reimbursement from other sources.? During fiscal year 2020, the Knox County Fiscal Court received reimbursements from the CRF for the payroll expenditures that had already been reimbursed by other state and federal grants or other governmental entities. ensure expenditures submitted for reimbursement from the CRF were not already reimbursed from other sources. Our total sample included 88 disbursements from a universe of 1,176 transactions included in the reimbursement request. The audit sample was selected using a non-statistical method. We then reviewed reimbursements received from other state and federal grants or other governmental entities for payroll expenditures that had also been reimbursed by CRF. The issue noted appears to be isolated to the CRF grant reimbursements. The deputy county judge/executive stated he was unaware that some of the payroll expenditures submitted by the sheriff?s office for reimbursement under CRF reimbursement contract had already been reimbursed to the sheriff?s office by other entities. The fiscal court received reimbursement for payroll expenditures that had already been reimbursed by other entities. The fiscal court may be required to repay the questioned costs back to the granting agency. 2 CFR ? 200.303 requires a non-federal entity to ?[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? In addition, 2 CFR ? 200.53 states: (a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper. Total known questioned costs are $55,286. Questioned costs were computed by comparing reimbursements received from other state and federal grants or other governmental entities for payroll expenditures to payroll expenditures submitted for reimbursement to the Coronavirus Relief Fund (CRF). During testing, we found the following expenditures included that had already been reimbursed: ? $3,337 gross wages were reimbursed for court security officers waiting on the court by the Kentucky Finance and Administration Cabinet, County Fee Systems. ? $21,463 gross wages were reimbursed for law enforcement officers serving as school resource officers by the Knox County Board of Education. ? $8,640 gross wages, $2,079 employer?s share retirement, and $1,868 employer?s share health insurance were reimbursed for one law enforcement officer who serves as the UNITE intelligence analyst from UNITE grant from the Unlawful Narcotics Investigation, Treatment, and Education, Inc. ? $6,215 gross wages were reimbursed for overtime for law enforcement officers from High Intensity Drug Trafficking Area (HIDTA) grant from the United State Office of National Drug Control Policy (ONDCP) ? $10,000 gross wages and $1,684 employer?s share retirement were reimbursed from Kentucky Law Enforcement Foundation Program Fund (KLEFPF). Not a repeat finding. We recommend the fiscal court strengthen internal controls over federal awards to ensure disbursements have not been reimbursed by other entities and are eligible expenditures. We also recommend that the fiscal court contact the Department for Local Government to determine if questioned costs should be repaid or if they can resubmit request with eligible expenditures.

The Knox County Fiscal Court Failed To Implement Internal Controls To Ensure Costs Submitted For Reimbursement Were For Eligible Expenses Not Already Reimbursed By Other Entitles Prepared by: Mike Mitchell Date Prepared: 07/20/2021 Person Responsible for Corrective Action Plan: Mike Mitchell Anticipated Completion Date: 06/04/2021 Official's Response: We agree. This has already been corrected with the Department of Local Government.

The Knox County Fiscal Court Failed To Implement Internal Controls To Ensure Costs Submitted For Reimbursement Occurred After February 29, 2020 Award Number and Year: C187 2020 and C2-091 2020 Name of Federal Agency: U.S. Department of Treasury Pass-Through Agency: Commonwealth of Kentucky, Department for Local Government ? Office of Grants Compliance Requirements: Activities Allowed or Unallowed; Allowable Costs; Period of Performance Type of Finding: Material Weakness; Material Noncompliance of Major Program Amount of Questioned Costs: $16,866 Opinion: Adverse The Coronavirus Relief Fund (CRF) was established under section 601 of the Social Security Act to cover costs that are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19). The $150 billion fund is to be used to make payments for specified uses to states, tribal governments, and certain local governments for the program period March 1, 2020 through December 31, 2021. During fiscal year 2020, the Knox County Fiscal Court received reimbursements from the Coronavirus Relief Fund (CRF) for the expenditures incurred before March 1, 2020. The Knox County Fiscal Court failed to establish effective internal controls over compliance requirements to ensure expenditures submitted for reimbursement from the CRF were not for work performed prior to March 1, 2020. Our total sample included 88 disbursements from a universe of 1,176 transactions included in the reimbursement request. The audit sample was selected using a non-statistical method. The issue noted appears to be isolated to the CRF grant reimbursements. The deputy county judge/executive stated he was unaware that some of the payroll expenditures submitted for reimbursement under CRF reimbursement contract were for work performed before March 1, 2020. The fiscal court, sheriff?s office, and ambulance service submitted payroll summaries for qualifying employees for March 2020. No one remembered that payroll for March 2020 would include payments for the work performed at the end of February 2020. The fiscal court received reimbursement for disbursements that occurred prior to March 1, 2020. The fiscal court may be required to repay the questioned costs back to the granting agency. 2 CFR ? 200.30 requires a non-federal entity to ?[e]stablish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award.? In addition, 2 CFR ? 200.53 states: (a) Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and (b) Improper payment includes any payment to an ineligible party, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), any payment that does not account for credit for applicable discounts, and any payment where insufficient or lack of documentation prevents a reviewer from discerning whether a payment was proper. 42 U.S.C. 601(d)(3)) states that local government shall use the payments from the Coronavirus Relief Fund to cover costs that ?were incurred during the period that begins March 1, 2020, and ends on December 31, 2020.? Total known questioned costs are $16,866; however, the first pay period included in the reimbursement was for pay period February 23, 2020 through March 7, 2020 which included work performed February 23, 2020 through February 29. 2020. As noted below, we only tested nine of 75 checks written for this pay period; therefore, we are unable to estimate the total amount of reimbursement received for work performed before March 1, 2020. The payroll systems will only run reports by pay period so we were unable to run reports to determine the amount included for work performed before March 1, 2020. During testing, we found the following expenditures incurred before March 1, 2020: ? $8,759 employer?s share retirement was reimbursed for February 2020 for employees of the Knox County Sheriff?s office. ? $841 gross wages and $202 employer?s share retirement were reimbursed for employees of the Knox County Sheriff?s office for work performed February 23, 2020 through February 29. 2020. We only tested one of ten checks written for this pay period. ? $2,589 net wages, $922 employer?s share retirement, and $293 employer?s share FICA were reimbursed for employees of the Knox County Ambulance Service for work performed February 23, 2020 through February 29. 2020. We only tested four of 24 checks written for this pay period ? $732 net wages, $176 employer?s share retirement, and $56 employer?s share FICA were reimbursed for accumulated leave vacation buyout paid to employee of the Knox County Ambulance Service. ? $1,428 gross wages, $119 employer?s share retirement, and $109 employer?s share FICA were reimbursed for employees of the Knox County Jail for work performed February 23, 2020 through February 29. 2020. We only tested four of 41 checks written for this pay period ? $640 cleaning supplies for the jail with invoice dated January 9, 2020. We tested three of 35 invoices for cleaning supplies for the jail and reviewed the dates on 32 invoices not tested. This invoice appears to be an isolated incident. Not a repeat finding. We recommend fiscal court strengthen internal controls over federal awards to ensure disbursements have not been reimbursed that were incurred outside the period of the award We also recommend that the fiscal court contact the Department for Local Government to determine if questioned costs should be repaid or if they can resubmit request with eligible expenditures.

The Knox County Fiscal Court Failed To Implement Internal Controls To Ensure Costs Submitted For Reimbursement Occurred After February 29, 2020 Prepared by: Mike Mitchell Date Prepared: 07/20/2021 Person Responsible for Corrective Action Plan: Mike Mitchell Anticipated Completion Date: 06/04/2021 Official's Response: We agree. This has already been corrected with the Department of Local Government.