Audit: County violating policy on contracts
by Andy Phelan
andy@dekalbchamp.com
County government is not following its own policy in regard to the award of some purchases greater than $50,000 and contracts more than $100,000, according to an independent financial audit report.
In a 10-page letter dated June 25, 2007, auditing firm KPMG LLP said the county’s purchasing and information system departments, which are controlled by the CEO and his staff, conducted “numerous purchases that were required to be competitively bid in accordance with the county’s purchasing policy, that were not bid.”
The report goes on to state that the administration approved contracts in excess of $100,000 for information systems (IS) consulting contracts “on numerous occasions,” which are also in violation of county policy. All contracts more than $100,000 must first receive approval by the Board of Commissioners.
The report, which highlighted more than a dozen deficiencies, also advised that the county’s automated purchasing system should require the input of a contract number on all payments to a contractor or supplier more than $50,000.
On Dec. 4, members of the commissioners’ audit and contracts review committee addressed the disclosure. Several commissioners expressed concern that the administration sought to transfer $1.4 million from reserve funds at their Nov. 27 business meeting to the IS Department for a “substantial overrun” in the department’s budget for consulting services.
It's one of the reasons the Board will vote Dec. 11 whether to review the contracts in question and potentially many others.
“We need to determine which contracts were issued that exceeded the threshold that should have come through the Board of Commissioners,” said Commissioner Burrell Ellis.“And audit which contracts that should have gone through the procurement or bidding process to determine if there were any efforts to circumvent the process. It's important because we have to ensure to the public that the process operates appropriately and that it is fair.”
Finance Director Michael Bell told commissioners Dec. 4 that an internal audit was conducted after he became aware the IS Department owed a consulting firm $1.4 million on a contract that had never gone before the board for approval. In some cases, KPMG auditors discovered a series of contracts in the neighborhood of $49,900 paid to one firm, some on the same day.
Executive Assistant Richard Stogner said “intense IS projects” dealing with the tax commissioner and tax assessor offices “became over-reliant on consultants.”
“At that point we understood we had budget problems,” Stogner said. “We didn’t have adequate controls in place.” Stogner said it’s not just the IS Department that has these issues but insisted it is mostly a training issue.
The report, which didn’t reach commissioners’ desks until Nov. 13, also showed that the county, in some cases, does not put a contract numbers on all payments to a contractor or supplier in excess of $50,000.
The report goes on to say that the Water and Sewer Department submits invoices with overages and shortages that are not followed up by departments. “Decentralized controls and the lack of appropriate reconciliation put the accounts receivable system at risk for inaccurate or fraudulent use of data.”
In all, the report said about 40 posting adjustments, amounting to $48 million, were needed due to the audit.
“Many of the posting adjustments resulted from information that was recorded multiple times, recorded backwards, posted to the incorrect fund or posted to the incorrect account.”
Stogner acknowledged, “We got too lax.” But he said the CEO has “moved very forcefully” get a handle the problem.
In a letter dated Nov. 8, Stogner, at the behest of the CEO, sent a letter to the department heads insisting they attend “a series of training sessions to ensure everyone involved in the procurement process be aware of our policies and procedures.”
Stogner said the CEO told department heads if they didn’t follow purchasing procedure properly, they “would get whacked” or fired.
Since 2006, the IS Department has had at least three directors or acting directors–Mike Amato, Jib Chatterje and now Felecia Alston.
The county did not fulfill an Open Records request from The Champion newspaper, seeking the original audit and the documents relating to the contracts in question, by press time.
Commissioners discussed the audit issue at the audit committee meeting Dec. 4. At the end of the meeting, Commissioner Elaine Boyer had a better idea of how the commission would proceed.
“All the CEO's discretionary spending should be audited, not just the IS contracts,” Boyer said.
Finance Director Bell, who distanced himself from Stogner in the audit committee meeting, said in a letter dated Nov. 14 to the CEO that “In our (finance department) opinion, there were gross violations of the County's purchasing and procurement policies.”
In the end, Stogner, who said he signed the contracts in question, took the blame. “I should have done a better job of oversight,” said Stogner. “That’s my responsibility. It’s my fault. I should have kept better oversight of what was going on in IS, budget wise.”
Commissioners tried last year to audit the administration in regard to changes they said were made to the Request For Proposal process. The BOC voted 4-3 to proceed with the audit, but the CEO vetoed it.
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