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Auditor says city violated laws, policies in finances, bids, more

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City regularly failed to seek bids on projects, spent money with businesses owned by city council members and mayor’s son

By Zac Oakes

 

A special investigation into the city of Campbellsville by State Auditor of Public Accounts Mike Harmon’s office uncovered several potentially troubling findings.
Among the findings include procurement policies by the city that did not comply with state law and city policy, potential conflicts of interest regarding no-bid contracts with city officials including three city council members and the mayor’s son, failure to file state-mandated statements of financial interest by city officials, and spending public funds without proper documentation or policies.
The auditor’s office examined a period of time between July 2014 and March 2017.
While none of the findings were criminal and required referral to law enforcement, Harmon said the auditor’s office does plan to refer their findings to the city of Campbellsville Ethics Board for review to determine if action should be taken.
“If we felt like law enforcement needed to be involved, we would refer to them for that,” Harmon said. “But we believe some of these findings should be referred to the City Board of Ethics.”
The Campbellsville City Ethics Board consists of five members. They are Don Bishop, Frank Cheatham, Lucy Cox, Mark Rodgers, and Carol Kirtley, according to Campbellsville City Clerk Cary Noe.
After receiving a tip, Harmon’s office began an investigation into the city of Campbellsville that spanned between six and seven months, according to Harmon.
In a phone interview last Thursday after the audit was made public, Harmon told the Central Kentucky News-Journal that this is around the typical length of investigations for his office, as long as those being investigated are cooperative in interviews and providing documentation.
Harmon said that his employees in the
field interviewing city employees and obtaining records did not report any problems with non-compliance.
“As far as I know, they were reasonably cooperative,” Harmon said. “I don’t recall receiving any complaints.”
In the conclusion of the report, the audit includes the following statement: “Overall, these findings identify consistent failures to follow established procurement laws and policies, lack of controls over use of public funds, and ethics concerns. Due to the issues noted, this report will be referred to the city of Campbellsville Board of Ethics for consideration.”
Below, the findings are broken down as shown by the auditor’s report.

Finding 1
City procurement practices did not comply with state law and city policy

The first finding in the audit is one that Harmon said he deemed to be one of the more significant findings. The report states that the city routinely procured goods and services exceeding $20,000 without following the competitive bidding process.
Among these goods and services that were noted include particular renovations to the Civic Center, paving services, vehicles, and equipment.
The report notes that the only city purchases examined during this time that appeared to follow bid requirements were those related to major water and sewer line projects.
Kentucky law (KRS 424.260) requires cities to procure certain services through a competitive bid process that includes advertising the city’s intent to accept bids before awarding the contract to a vendor. That competitive bid process consists of cities advertising their intent to accept bids in the newspaper before awarding the contract to a vendor.
An examination of city records shows that the city obtained quotes from other vendors in eight of the 21 instances identified in which the city failed to advertise for competitive bids. The city, however, did not obtain those quotes through a sealed bid process, according to the report.
“City personnel do not appear to understand when it is appropriate to advertise and seek competitive bids and when it is appropriate to simply obtain vendor quotes, indicating a need for formal procurement training,” the report reads.
Kentucky cities can adopt a local model procurement, but if not, they must be in compliance with the aforementioned KRS statute. Each model requires cities to provide an opportunity for competition and create the opportunity to receive and compare multiple bids. Harmon’s office said the city of Campbellsville has not adopted a local procurement model, so therefore it must follow the KRS statute at a minimum.
Civic Center renovations are among the projects listed in the report. Renovations began in 2013 and continued until February 2016, with total costs in excess of $230,000. The report states that while the city attempted to perform much of the work using city personnel, the mayor acknowledged outside vendors were used.
One particular construction company, which remained unnamed, was paid nearly $47,000 between April and August 2013 for various jobs associated with the renovation project. The report said the city contacted the vendor to perform various work through the four-month period as opposed to advertising bids for the work.
One aspect of those renovations included a sound system from a media company that cost $24,190, paid in two installments of $12,095 each, with the second payment being made on Sept. 5, 2013, according to the report. From November 2013 to January 2014, the city expended an additional $12,113 for services from the same vendor.
Campbellsville Mayor Tony Young told auditors that additional services were necessary to address sound quality issues, which he wanted to address quickly, and that is why the city had not obtained bids.
Young said the original cost of the sound system was under $20,000, so he believed no competitive bid would be required. It was after the system was installed that the city determined it would be beneficial to have audio/visual equipment installed in the basement of the civic center for use during executive sessions. Later, Young said they determined more needed to be done to correct audio issues in the civic center. The company that had provided work on the previous two projects recommended the city purchase and install baffles on the wall. All three of these projects were under the $20,000 threshold according to Young, and were independent of one another.
Harmon, however, notes the cost of the sound system alone exceeded the $20,000 mark set forth by the law, and the city should have sought bids for the equipment through a competitive bidding process when it was “reasonably determined” the cumulative costs could exceed $20,000.
Young also noted the contractor who performed work on the civic center did so under separate contracts and each quote fell under the $20,000 threshold.
Another area the audit specifically noted was with paving services. Between July 1, 2015, and March 31, 2017, more than $556,513 was paid to one unnamed vendor to provide paving services on behalf of the city.
On average, paving services cost the city in excess of $100,000. Harmon’s report notes that the city failed to seek competitive bidding for these paving services.
City officials told auditors that the majority of paving work for the city consists of repairing small areas and only one company in the area is willing to perform that type of work.
City officials also told auditors that there are only two companies in the area that perform paving services and one of them declines to bid on any project that does not involve paving an entire street.
In his response, Young wrote that no other provider would be willing to even meet with the city’s street department supervisor to discuss what the city needed. Young contends that other contractors said the small scope of the work was “not such that they would be interested in meeting with city officials, much less in submitting a bid.”
Harmon said that while the city may not be aware of other local vendors willing or able to perform these services, it does not negate the requirement to advertise for such services.
“Even if there is one resulting bid, the chance of competitive bids before the process is closed may influence the bidder to present the most competitive price and terms,” Harmon notes. “Competitive bidding also serves as a transparent process for procurement.”
Harmon said his office also received concerns regarding specific vehicle and equipment purchases. The audit report describes how the city procured vehicles by sending a city employee to multiple dealerships and telling dealers that the city qualified for state contract pricing, then purchasing the vehicle at the lowest offered price.
State price contracts are agreements entered into between a specific vendor for precise specifications with the Kentucky Finance and Administration Cabinet (FAC) as a result of a competitive bidding process. The report states that city policy and state law permit the procurement of goods and services through a valid state price contract.
An unnamed dealer from which the city procured the mayor’s assigned vehicle confirmed that it labeled an invoice with “KY State Bid Concession” but was actually a manufacturer discount, not a price established under a state price contract with the dealership. An FAC official added that state price contracts that cities are eligible to participate in are not established with vehicle manufacturers.
In addition, there were no vehicles matching the description of the vehicle purchased for use by the mayor identified as available for purchase on a state contract at the time that vehicle was purchased.
This is another instance in which the auditor’s office said the city failed to comply with state law or its own procurement policy by not advertising for competitive bids or purchasing pursuant to a state price contract.
Young contends in his response that the city’s vehicle purchasing practices were competitive and the city believed it was acting in compliance with procurement requirements. Young said that whenever a vehicle was needed, a city representative would seek and obtain state contract pricing and then go to several local dealerships to communicate that the city was eligible and wanted the dealership to match or be lower than state contract pricing.
“Each and every vehicle purchased was after this competitive pricing process occurred,” Young wrote.
Harmon reiterated that one of the city-purchased vehicles was not available under a state price contract and therefore the city’s procedures “were not the appropriate competitive bidding process required by state law.”
These were not the only instances noted in the report in which the city’s purchasing practices did not align with city policy. During the examination period, the city paid one vendor more than $1,000 for waste disposal services without following applicable procurement laws or documenting an exception to bid requirements. The Water and Sewer Department, in a different instance, paid another vendor more than $716,000 for coagulant between July 2014 and March 2017, also without following procurement rules.
Young claims the company purchased coagulant from this company because it has a primary chemical that works particularly well with their system.
He says the city’s procurement policy allows for non-competitive negotiations for purchases over $10,000 when bidding or competitive negotiations are not feasible or when the product or service can only be obtained from one source, which he said is the case with the solid waste disposal and the coagulant.
A side note that was not a primary aspect of the investigation was a lack of written contracts with multiple city vendors, namely the aforementioned solid waste disposal vendor, the coagulant vendor, as well as the city attorney. The report notes that the city spent over $100,000 with each of these vendors during the examination period.
Harmon writes in his audit that it seems city officials understand the need for a competitive procurement process but their understanding was based more on internal discussions and past practices rather than formal training.
During the course of interviewing the mayor and other city officials, Young noted to auditors that he relied on the city clerk to assist him in making sure procurements over $20,000 were properly made.
Young stated that he was not aware of a city procurement policy during these interviews.
“I did not even know we had a policy until the Auditor of Public Accounts requested it,” Young told the auditors.
The city of Campbellsville’s procurement policy was established in August 2005, according to records.
While Young, as noted in his official response to the audit, claims that the city did engage in a competitive bidding process in these instances, Harmon said that competitive bidding must follow state law, which he says the city did not follow as the city did not advertise their intent to accept bids on multiple occasions.
In his official response, Young said “Every purchase which required competitive bids were competitively bid. In addition, the city has received appropriate value for each and every dollar spent.”
Young also wrote that the city’s procurement policies have been in place for many years.
“Please understand that the city’s practices with respect to procurement and other issues addressed in your report have been in place for many years,” he said. “After I was elected, I maintained much of the same staff from the prior administration and many of the same practices have continued.”
Young also contends that no violations were ever intentional, in regard to both procurement policy and ethics violations.
“All decisions were made in good faith with the best interest of the city in mind,” Young said.
Young said the city’s primary error “was not questioning whether past practices were in strict compliance with all requirements.”
Young routinely referenced KRS 45A.380 regarding these procurement policies pertaining to sole source providers, specifically the pavement services, solid waste disposal and coagulant, but Harmon said that statute is not applicable due to the fact that the city has not adopted a local procurement model.
Instead, they must abide by KRS 424.260.
“…The City must follow the specific requirements of KRS 424.260, not just any process it deems to be “competitive,”’ Harmon said.
Harmon’s office recommended that the city begin immediately complying with KRS 424.260 and its own procurement standards, specifically ensuring a competitive bidding process when the aggregate amount of payments is “reasonably expected” to exceed $20,000. Harmon’s office also recommended that city personnel with any level of procurement authority receive formal training on state law and local standards.

Finding 2
The city entered into no-bid contracts with city officials, creating potential conflicts of interest

During the course of investigation, it was determined that the city had procured goods and services from businesses owned by city council members and the mayor’s son exceeding $188,000 between July 1, 2014 and March 22, 2017. Two of those transactions, according to the report, exceeded the $20,000 threshold and did not comply with the previously mentioned competitive bidding requirements.
Young, however, contends that although those purchases were not advertised in the local newspaper, they were still procured through a competitive bidding process.
Harmon reiterated that the city cannot just follow any process that they themselves deem to be “competitive,” but must comply with state laws.
The city council members that owned or had interest in businesses in which the city procured goods and services from were confirmed by Harmon’s office to be Randall Herron, Terry Keltner, and Allen Johnson. 
Harmon notes that this seems to be a violation of Section V of the city procurement standards, which states “no elected official, employee, or designated agent of the city will take part an [sic] interest in the award of any procurement transaction if a conflict of interest, real or apparent, exists.”
Additionally, KRS 61.252 states, in part, “No officer or employee of any city or city agency shall directly or through others undertake, execute, hold, or enjoy, in whole or in part, any contract made, entered into, awarded, or granted by the officer’s or employee’s city or city agency…”
There are exceptions to that KRS code, but Harmon said that auditors reviewed the documentation of these expenditures and found no evidence that they met any of the exceptions in the statute. 
These purchases involve the purchase of a medic unit in March 2015 for $123,585. The report said that the city did not perform a public bid opening as required by the city’s procurement policy and failed to advertise their intent.
The city received two quotes from separate vendors, with the contract being awarded to the lower of the two bids, which happened to be a business owned by a city council member. According to a Central Kentucky News-Journal report, the council voted 11-0 to purchase the ambulance from Mid-America Ambulance in Campbellsville. Council member Randall Herron abstained from the vote.
The other quote came from a company based out of Ohio that had submitted a quote for $154,918 according to a report.
The EMS director told auditors he contacted four vendors to inquire about providing quotes for a specific medic unit. Records show correspondence with those four vendors dated Feb. 11, 2015, and for quotes to be submitted by the end of the month. The quotes were not opened in a public forum, according to the report, and were not shared with anyone until presented to the council during that meeting.
The council member (presumed to be Herron) said that when he first took office, there were questions raised about the propriety of doing business with the city as a city official. The council member said that he received a Kentucky Attorney General Opinion when he came into office, in which he understood that if he did not “participate in designing the specifications, took no part in the actual procurement, and abstained from voting on the action, then his company could bid on city work.”
Harmon said that the council member was not able to provide documentation of that Kentucky Attorney General opinion nor did subsequent research uncover an opinion from the Attorney General’s office.
According to state law (KRS 61.252), other actions must be taken to avoid a conflict of interest. These actions include publicly disclosing the specific nature of the contract transition and the official or employee’s interest in the contract, the disclosure being made part of the official record before the contract is executed, a finding made by the governing body of the city or city agency that the contract in question is in the best interests of the public and the city because of price, supply, or other specific reasons, and that finding be made part of the official record.
Harmon said that an examination of official city minutes from the meeting show that Herron abstained from the vote, there was no note of an official disclosure on record.
“These circumstances are even more concerning because the city did not procure the medic unit through a sealed bid process,” Harmon said.
The report notes that there was more than $140,000 in repairs and services from the council member’s business during the period examined.
In his response, Young writes that the matter was addressed before the entire city council and that media members and members of the general public were at the meeting when the transaction was discussed. Young contends that all those in attendance were aware that the medic unit was being purchased from the city council member’s company. Young said he disagrees that there was any ethics violations. He also contends that by city council members voting in favor of the transaction, the exception to the rule is satisfied.
Harmon said that the law states that these disclosures and findings must be part of the official record, not just discussed at the meeting.
In another instance uncovered during the investigation, the city paid another council member’s business $23,900 for an air conditioning unit and installation costs associated with work performed for a new building at the City Sewer Plant.
City records, according to Harmon, showed that the city received three quotes for the air conditioning project. The first quote was received in Sept. 2015 for $26,070, the second coming on Oct. 30, 2015 for $28,200, and the final quote, from the council member’s business, came on Nov. 6, 2015.
The council member in question, believed to be Keltner, stated that he was not aware of other quotes given to the city for this work and that he had performed work for the city for many years, even before being elected to office. According to the report, the city procured more than $46,000 of parts and services from the council member’s business during the period examined.
Young said that they disagree with the auditor’s conclusion that public notice means advertising in the newspaper. However, he goes on to say that all solicitation for bids will be published in the newspaper going forward.
Auditors also discovered that the city procured flowers and embroidery services exceeding $1,100 from a business owned by the mayor’s son and daughter-in-law, according to the report.
City personnel told auditors that the city had done business with the flower shop for several years, but the mayor’s son and daughter-in-law had only recently become involved with the business. The report states that they purchased the flower shop on Nov. 10, 2015, and the embroidery business to accompany it on May 17, 2016.
Young apparently informed city staff members of this ownership and “discouraged” the use of this business. There is no record of when this discussion between the mayor and city staff took place, and there is no record of any further action being taken to discontinue business transactions between the city and the flower shop.
Young said that the city had a practice of alternating purchasing flowers and gifts from different providers in the community on a rotating basis. He claims that he was not involved in these purchases but did permit the rotation to continue.
He said the value was received by the city and no further purchases will be made from the business, as well as no further purchases of flowers or gifts by the city.
In reviewing city expenditures, the city did business with a council member’s business to perform vehicle air conditioning work. This occurred between July 1, 2015, and Jan. 31, 2017, and the report shows an exchange of $1,056.91.
The council member told auditors that he had owned the business for 37 years and had performed work for the city “on and off” during that time before becoming a city council member in January 2015. The council member told auditors that he did not think of these transactions as creating a conflict of interest for himself.
Young agreed with the council member and said that they have utilized his services for years, but did note that the city should have “taken steps to ensure vehicles were taken to other providers.” Young said they will do that in the future.
“Failure to follow procurement laws and policies is especially troubling in these instances where policies designed to address conflicts of interest were also not followed,” Harmon wrote. “The city did not take the necessary steps to ensure compliance with conflict of interest policies. By procuring goods and services from businesses owned by three council members, and from the mayor’s son, the city did not appear to comply with its Code of Ethics.”
Violation of the KRS statute regarding conflicts of interest is a Class A misdemeanor. If convicted, penalties can include removal from office and voiding of contracts at issue.  Additionally, the city’s procurement standards indicate any intentional violation of the standards will open the official or employee to civil suit without legal representation by the city and contractors will be barred from doing future business with the city.
The report does make note that no city personnel reported to auditors that they felt pressure to use any particular business, including businesses affiliated with city officials.
Harmon’s office made a recommendation that the city refrain from conducting business with businesses owned or operated by city officials when it violates state law, the city’s procurement standards, or the city’s code of ethics.
Harmon’s office is also referring these findings to the City Ethics Board for further consideration of the potential conflicts that may exist.

Finding 3
City officials did not complete statements of financial interest required by the city’s Local Ethics Code and KRS 65.003 (3) (b)

Elected officers and candidates for elected city offices are required by state and local law to file an annual statement of financial interests with the Board of Ethics. These statements must be filed no later than 5 p.m. on April 15 of each year.
However, the investigation discovered that excluding 2017, several city officials had not submitted statements of financial interests since 2011.
The report states that auditors requested these statements from July 2014 through Jan. 2017. The only statements provided prior to 2017 were eight statements from 2011.
Initially, auditors were provided with only four statements, including one for each of the three council members elected in the fall of 2016. Those council members were determined to be Jay Eastridge, Alexander Shively, and Diane Ford-Benningfield.
Auditors made additional requests for any remaining statements and were provided with two additional statements, one for the mayor and one for the city clerk.
Several weeks later, the city clerk provided statements for the remaining eight council members. All 14 statements provided were completed during calendar year 2017, according to the report.
Auditors confirmed that other than those provided, there were no disclosure statements on file since 2011. Several city employees that have been employed by the city for 10 years or more did not have statements on file.
Noe told auditors that she was not aware that she and the mayor should complete a disclosure statement. Young said he was not aware of the annual reporting requirement and “did not know why the city had not ensured that disclosures were done each year.”
The 2017 statements also did not include a statement that should include among other things “each source by name and address of gifts or honoraria having an aggregate fair market value of $100 or more from any single source, excluding gifts received from family members, received by the filer or any member of the filer’s immediate family during the preceding calendar year.” The city’s Code of Ethics requires this statement.
Young claims that the city has had a practice of obtaining statements of financial interest from any council member or city official following their election or appointment, but not on an annual basis.
These findings also will be reported to the City’s Ethics Board to monitor compliance and determine any appropriate action.

Finding 4:
The city did not properly safeguard public assets and spent public funds without appropriate documentation or policies.

In a time period spanning from July 1, 2014, to March 22, 2017, the city spent nearly $15,700 in city funds on flowers, gifts, and meals. A city debit card was used to incur $2,256 of this total, according to the report.
Harmon said that documentation for the majority of these purchases did not have sufficient detail to justify the use of public funds, such as names of individual attendees at meals, gift recipients, or details of the items purchased.
Harmon noted that some of these expenditures may be reasonable, but the city does not have a written policy establishing guidelines for such spending and without such established guidelines, the city cannot ensure public funds are used for legitimate operational purposes.
The debit card in question was utilized for approximately $229,080 in purchases according to the report, and the card was connected directly to public bank accounts.
Of those total expenditures, the report said, $23,788 was in purchases directly linked to the bank account holding the city’s general fund, and $228,178 were linked to various other city accounts.
The debit card raised problems of security, according to Harmon, which also stemmed from the fact that the debit card was compromised in November 2016. There was no further information on how exactly that card was compromised. Young cancelled that card and opened a credit card account instead. That account has two cards associated with it, one held by Young and the other by Noe.
Young, in his response, said that the city will cease the use of debit cards and said that there were no bad experiences with respect to use of city debit cards and “no funds were lost, compromised, or adversely affected,” according to Young.
While the card associated with the city’s general fund was cancelled, the Water and Sewer Department and the City Police Department each have debit cards tied to their respective department’s bank accounts, which Harmon notes is a security risk.
Also regarding the debit and credit cards, Harmon noted that the city did not have a policy establishing restrictions on the use of these cards during the examination period. Policies including restrictions on usage were implemented in April. However, Harmon said, those restrictions do not apply to debit cards and do not address penalties or consequences if it is determined that abuse occurs.
 City funds were also determined to be spent on various meals between July 2014 and March 2017.
A sample of expenditures identified meal purchases totaling approximately $9,900 and included nearly $1,400 spent for meals at local restaurants, as well as $5,910 spent for catered holiday meals for employees.
Of those 37 meals, approximately 76 percent were purchased using a city debit card. City personnel told auditors that local meals purchased with a city debit card were for official city business, but Harmon said that documentation reviewed from those meals showed there were instances where meal attendees were not identified, other instances where documentation provided no detail of attendees or what was purchased, and one meal (totaling $22.37) without any supporting documentation.
Also noted in the report is $5,900 spent for city official and employee holiday meals and $600 for a police department appreciation celebration. Approximately half of this was the city’s annual Christmas breakfast. The auditors also noted other miscellaneous food purchases that they said “did not appear to be for legitimate operational needs” such as $125 for pies purchased for a swearing-in celebration in April 2015 and $22 for a birthday cake and ice cream to celebrate Young’s birthday in July 2016.
The auditors also noted the use of city funds on gifts, including expenditures exceeding $4,000 from July 2014 to March 2017 for gift cards or gift certificates given to city employees. The largest of these was in December 2015 in which the city purchased 154 gift cards at $25 each as holiday gifts for city personnel. That expense was incurred through four checks totaling $3,850 made payable to an unnamed local civic organization.
Young told auditors that Christmas gifts were given every year prior to him taking office and he had ended this after being advised at a local government seminar to end the practice.
Additionally, documents show that Young was reimbursed $50 in December 2014 for a gift card he purchased at a local restaurant. Documentation for this reimbursement noted it as “swearing-in gift reimbursement.”
Young told auditors that “the judge” had performed the swearing in ceremony for new council members on his own time and he wanted to give the judge a gift as a “thank you” gesture.
Harmon said that while this may be a kind gesture, it is a questionable practice to expend public funds for gifts to government officials.
Expenditure documents also showed the city purchased retirement gifts, including two watches, a necklace, and a gift card to a sporting goods retail store. The report notes that the city spent approximately $100 on average toward retiree gifts, but expended $250 on a diamond pendant necklace given to one retiring employee.
There are several laws against providing additional compensation for city employees, including Section 3 of the Kentucky Constitution, which prohibits additional compensation for public services.
The city also expended approximately $4,000 during this time for purchases from six floral shops for various occasions, including a banquet, a birth, and funerals.
In the future, Harmon recommends that if individuals wish to have a party or provide a retiree with a gift, they do so through voluntary contributions of personal funds as opposed to city funds.

Finding 5
The city did not properly account for regulatory license fees collected

The city of Campbellsville began selling alcohol after it went moist in 2008. Later, the city expanded those sales by going wet in November 2016. The regulatory license fees from those sales, as designated by KRS 243.075 must be deposited into a segregated fund and are to be used only for additional policing, administration, and regulation expenses due to the repeal of prohibition.
The auditors found that the city did not segregate these funds until March 2017. A separate bank account was established to maintain these funds in March.
The regulatory license fee was established via city ordinance as 8 percent of gross receipts from the sale of alcohol, which at the time were restricted to purchasing alcoholic beverages with a meal. Between July 1, 2014, and June 30, 2016, the report shows the city collected and deposited more than $46,000 into its general fund from these regulatory license fees.
City officials acknowledged that the funds were not coded in any way when expended to differentiate these funds from other general fund revenues. Harmon said that without a segregated fund in place, the city could not specifically identify how the regulatory license fees were used.
Reports show that the city expended more than $2.5 million on police department expenses in fiscal year 2015 and fiscal year 2016.
A total of $13,454.36 was transferred from the general fund into the newly created account in March 2017. That figure represented the fees collected by the city between July 1, 2016, and Feb. 21, 2017, according to the report.
Young said that when the city became “moist” in 2008, he had no involvement since he was not in office at the time and collection and accounting for regulatory fees were set up by the previous administration.
“This was set up under a prior administration and I had no involvement in it and no understanding of what the applicable statutes required,” Young said.
In his response, Young writes that he believes he has improved many city practices and that the city plans to take specific actions with the auditor’s recommendations.
Among those practices, Young said the city will take action including assigning a specific person in the city to be responsible for ensuring compliance with procurement and ethical requirements, providing employees with procurement training, entering into written contracts, collecting annual statements of financial interest, cease the use of debit cards, implement user agreements for individuals assigned a city credit card, cease spending of “even nominal” city funds for holiday celebrations and employee gifts, maintaining segregated accounts for regulatory fees from alcohol sales, implementing restrictions associated with collection and use of funds identified to reduce risk of non-compliance, and developing a written policy related to spending funds for lunches and other miscellaneous expenses.
Harmon wraps up the audit report with this statement, “The city must comply with its own ethics code, the state laws regarding procurement, and the city’s own procurement policy. However, the city’s codes and policies do not supersede state law.”
In a phone interview, Harmon said he has only done a few city audits during his time in office, as the office typically performs county audits, but said that these type of findings are not common.
However, Harmon said that if they take the guidance of the recommendations in the report, he believes the city should be fine, but if they do not follow the recommendations, he believes that could be a problem.