Crit Luallen just released part two of her annual audit of State Government. And it’s a doozy.
The Auditor’s office has found that the Kentucky Division of Emergency Management failed to properly oversee a $1.8 million federal Chemical Stockpile Emergency Preparedness Program grant for ten (10!) counties. And because of irregularities at the local level, the finding has been handed over to the Office of the Attorney General, FBI and the United States Department of Homeland Security.
As it turns out, failing to properly oversee the purchase of emergency response equipment can get you in a heap of trouble.
It the latest volume of the state government audit, auditors have 14 findings, which includes 3 instances of material non-compliance– which means an agency shows significant deficiencies in overseeing federal funds (2 in the Dept of Military Affairs and 1 in Transportation).
From the press release:
Auditors discovered the Laurel County CSEPP program was provided a $1,874,615 grant to allow the county’s CSEPP director to act as the purchasing agent for specific equipment for all 10 Kentucky CSEPP counties.
With chemical weapons housed at the Blue Grass Army Depot in Madison County, Central Kentucky counties receive federal dollars through CSEPP, which is administered through KyDEM under the Department of Military Affairs.
These counties include: Madison, Clark, Powell, Estill, Jackson, Rockcastle, Garrard, Fayette, Jessamine and Laurel.
The bid was ultimately awarded to PREP, a business owned by the business partner of the Laurel County CSEPP director. The business partner is now the director’s wife, according to the audit.
The more than $1.8 million expenditure handled by Laurel County’s CSEPP Director is 24 percent of Kentucky’s $7,856,193 annual CSEPP grant award.
The project included the acquisition of 40 specially equipped emergency response trailers, as well as additional equipment necessary to make the trailers operational, according to the audit, which found that these purchases took place without appropriate oversight by KyDEM.
[T]he project called for Homesteader brand trailers but PREP delivered 40 LA Cargo brand trailers.
Auditors note that questions were raised by one county CSEPP coordinator as to whether these trailers were “even new due to deteriorated conditions in some areas.”
According to the audit, county CSEPP officials brought their concerns about the equipment they received to monthly FEMA meetings; however, KyDEM and FEMA failed to initiate a formal investigation.
Head exploding yet?
Other audit findings include:
1.) KyDEM and Military Affairs did not comply with federal requirements concerning subrecipient single audits. Federal guidelines require subrecipients with $500,000 or more in funding to receive a single audit of its major federal programs.
During audit procedures performed on both CSEPP and Public Assistance grants, auditors found numerous instances where subrecipients were not asked to certify whether or not they were required to have a single audit or did not have their single audits reviewed.
This included 15 of 20 Public Assistance (grants for major disasters or emergencies declared by the President) subrecipients examined and nine of 10 counties receiving CSEPP grants. The 15 Public Assistance subrecipients received $388,807 in fiscal year 2008, while the CSEPP counties received $6.8 million in CSEPP grants, $41,766 in Public Assistance and $224,067 in other FEMA grants.
The audit recommends KyDEM revise its procedures to ensure that all subrecipients, regardless of type, are properly monitored, including providing single audits for review when applicable. This is a material non-compliance finding in the audit.
2.) The Transportation Cabinet should implement formal policies and procedures for subrecipient monitoring regarding grant awards from the Highway Planning and Construction Program.
This is a repeat finding from last year’s audit, though improvements have been made. Auditors were unable to review this list during last year’s audit because the Office of Local Programs did not maintain a subrecipient list. During last year’s audit, the Office of Local Programs was unable to readily identify its subrecipients or show documented evidence of its monitoring procedures.
In the current audit, auditors tested several sample areas for subrecipient monitoring and noted that being able to review subrecipient files for this office is an improvement; however, there are still issues with inadequate monitoring.
“Overall, we did not see sufficient evidence of monitoring occurring during the award period. Documented site visits, regular contact, reporting or other means of monitoring were not documented in the subrecipient files,” according to the audit.
3.) The audit also recommends that the Cabinet For Health And Family Services improve the security over Electronic Benefits Transfer (EBT) Cards at local offices. An EBT card allows participates to access the Food Stamp Program. Auditors reviewed local offices in Casey, Fayette, Hardin, Jefferson, Lyon and Madison counties.
Report Volume II & Report of the Audit
When will we learn, Kentucky?