For the recently completed Washington State Auditor Accountability and Financial Audit Reports, click on the documents here:
Accountability Audit Report for the period January 1, 2023, through December 31, 2023
The County lacked internal controls and procedures over contract monitoring to ensure safeguarding of public resources (accountability audit.)
Background
Franklin County serves more than 96,000 residents in southeast Washington. An elected, three-member Board of Commissioners governs the County, which had an annual budget of about $47 million in 2023. The County contracts for the management and operation of the HAPO Center, an event center in Pasco, for food and commissary services, and medical services at the Franklin County Jail. The County is responsible for establishing contracts that align with state law and ensuring compliance with contract terms. Inadequate internal controls can hinder the County’s ability to ensure contracted parties send all funds they owe and provide services as agreed.
HAPO Center Management Services Contract The County contracted with two third-party management companies to manage the financial and operational activities at the HAPO Center during 2022 and 2023. In 2022, the County entered into a three-month contract with a company and approved a contract amendment for $100,000 that extended services through June 30, 2023. In June 2023, the County performed a request for proposal process and selected a new contractor to provide management services beginning in October 2023. The new contract included a term of five years and was valued at $1,446,000.
Description of Condition
HAPO Center Management Services Contracts The 2022 contract required the management company to collect and remit all revenues from the HAPO Center to the County and to provide all supporting documentation. Additionally, the contract indicated the County was responsible for paying the contractor a monthly management fee of $12,500 and reimbursing the contractor for expenses related to the HAPO Center activity. The County paid the management company $37,500 and $180,722 in 2022 and 2023, respectively, for its management services. The County did not ensure the contract terms were followed and instead allowed the management company to manage all the financial activity and only provide profit and loss statements throughout the year. Although the County selected a new contractor in 2023 and entered into new contract terms that resolved most items noted above, the County was also unable to demonstrate it monitored the new contract terms during the audit period
Cause of Condition
HAPO Center Management Services Contract Staff in the County Administrator’s Office are responsible for monitoring the activity at the HAPO Center. The County experienced staff turnover in its Administrator's Office and did not appropriately monitor the contracts.
Effect of Condition
HAPO Center Management Services Contract The 2022 contract was not in compliance with state law, which requires the County to make all deposits at least once every 24 hours and all expenditures of the County to be supported. The County was unable to provide documentation supporting the revenues and expenditures the HAPO Center management company reported. The County was also unable to provide evidence that it was monitoring financial activity at the HAPO Center for either of the two contracts in place during the period. Without effective monitoring processes and support for the reported revenues and expenditures, the County cannot ensure it receives all amounts it is due and that all expenditures are for an allowable purpose. As a result, we were unable to opine on the reported financial activity of the HAPO Center presented in the fiscal year 2023 financial statements.
Recommendation
We recommend the County strengthen its oversight and monitoring over contracts to ensure contract terms comply with state law and are followed. We further recommend the County continue to seek support for 2022 and 2023 HAPO operating activity and seek repayment of any amounts still owed for both HAPO and commissary sales. Lastly, we recommend the County review its jail medical services contract to determine if funds need to be recouped.
HAPO Center Management Services Contract:
The County agrees with the State Auditor’s Office and has made the necessary changes to address their recommendations. A competitive process resulted in selecting an experienced management group that has addressed the internal control and reporting deficiencies. The County has engaged the former vendor and requested that they supply the documentation and records they contractually agreed to compile and report to account for all public funds properly. We appreciate the State Auditor’s Office's recommendations and the opportunity to address the identified issues. We look forward to working with the State Auditor's Office to ensure continued progress and compliance with all applicable laws and regulations.
No comments:
Post a Comment