The Utah Office of the State Auditor has released a report chiding Uintah County for bad accounting practices and improper spending of federal funds meant to address the coronavirus pandemic.
The state’s audit, which evaluated the county’s 2020 finances, identified 13 problems “spanning the entire spectrum of government accounting from its tone at the top to its day-to-day management” of funds, according to a news release issued Wednesday.
County commissioners “blurred the lines of accountability” when they took budget responsibilities from the county’s clerk/auditor, according to the audit. The clerk/auditor, in turn, “lacks the requisite skills, knowledge, and expertise necessary” to prepare financial reports, it said. Some officials circumvented polices for procuring contracts and internal controls, the audit found, “creating a perception that those internal controls were not important.”
But what spurred the audit, and resulted in some of its more significant findings, were complaints about the commission’s decision to spend pandemic relief funds to expand a tubing hill and to award business grants to their family members.
“We received multiple anonymous whistleblower tips expressing concerns with spending of certain COVID-related federal money,” State Auditor John Dougall said in an email to The Salt Lake Tribune.
Uintah County resisted responding to Dougall’s initial inquiries about those funds, he added, and he directed his team to perform the audit.
“I‘m deeply troubled by the severity of financial impairment in Uintah County government, particularly the disregard for regulations required for federal funding,” Dougall wrote in the Wednesday news release.
In a written response to the audit, county commissioners called the audit “unlawful” and disagreed with many of its findings.
When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act last spring, it directed the state of Utah to direct and oversee funds in most of the state’s counties due to their population size. Uintah County received $5.1 million.
The audit found that nearly $3.5 million went to business economic recovery grants in the county, but officials overseeing those dollars didn’t do anything to verify or document whether applicants had been impacted by the pandemic.
Of those grants, $117,000 went to “companies owned by certain County officials and their immediate family members.” The Tribune previously reported that Commissioner Bart Haslem’s son received $20,000 in CARES money for his aviation business and Haslem’s wife received $20,000 for her travel business. Commissioner Brad Horrocks’ sons also received a total of $77,000 for their RV, farm, energy and hunting outfitter businesses.
Another $243,751 went to purchase equipment for the Buckskin Hills Ski and Snow Tubing Hill, the audit found, which was not adequately documented. The governor’s office had questioned why the equipment couldn’t be leased, instead, to meet the needs of a public health response, and some of the funds didn’t have sufficient proof that they were spent on pandemic-related needs.
A request for public records sent in January showed Uintah County had spent at least $322,000 on the tubing hill.
The audit further called into question the commission’s decision to buy six snow guns for the tubing hill from the same vendor at $19,999 each, which was exactly one dollar below the threshold that would have required the commission to solicit bids. The commission changed that policy days later, according to the audit.
Circumventing the public procurement process was apparently a pattern of behavior of the commission in 2020, with the audit noting several other examples. The county paid $42,200 to a single consultant for social media and communication services without a contract or bidding process. In November 2020, the commissioners purchased a $159,000 body scanner for the jail without soliciting bids, then retroactively changed policies to allow for the expense, the audit claims.
“Retroactively amending policies creates a perception that following established policies is not important,” the audit notes.
In addition, the audit dinged the county for not disclosing conflicts of interest for elected officials and officers last year. It chided county officials for using poorly designed and difficult to track financial software. It claimed county workers lacked “sufficient experience and training,” causing them to bungle management of other federal grants, putting future funding at risk.
County officials respond
In a written response to the audit, commissioners called the audit “unlawful,” pointing to state code that notes Dougall’s office cannot conduct “performance” or “special purpose” audits on public entities that already have elected auditors and have had their finances reviewed by an outside auditor within the last budget year.
“We believe audits are necessary and that audits show things you need to improve on,” Haslem said in an interview with The Tribune. “But the audit that was done by the state auditor, it was done illegally.”
The county commissioned its own independent audit after the state began its review. It listed similar issues noted by Dougall’s office and found some additional ones, such as improperly noticed public meetings. That report also attached the state’s audit, noting that those findings should be considered.
While the county commission’s reply disputed the legality of the state audit, it proceeded to respond to the listed problems, disagreeing with the bulk of them. The commissioners claimed, for example, that they properly documented the need for tubing hill expenses during discussions at public meetings.
“We didn’t build a tubing hill with the [CARES] money, we expanded the tubing hill,” Haslem told The Tribune, adding that expansion was need during the pandemic for “spacing, getting people outside.”
The commissioner acknowledged that the audit did make a handful of valid points — their financial tracking software needs an overhaul, for example. They should have filed conflict of interest disclosures. And they should have solicited bids for their social media contractor.
“We agree, we screwed up,” Haslem said.
But he disagreed with most of the audit’s claims and said Dougall was using the audit to “bully” the county. “I’m not trying to start a war with the state auditor,” Haslem said, “[but] I would like to see each agency follow what the state code is.”
The commission refused to sign a representation letter asserting the county had properly reported its financial information, developed sound internal controls and that it took responsibility for its financial statements — something all financial audits require, Dougall told The Tribune.
Asked why the commission declined to sign the letter, Haslem alluded to a feud commissioners had with the county’s clerk/auditor, Mike Wilkins. The commissioners stripped Wilkins of his budget oversight authority in 2019 and assigned it to a new budget officer under their direction — something the audit criticized the county for as an obfuscation of accountability. Earlier this year, they also attempted to strip the clerk/auditor of his accounting authority, which Wilkins decried as an upset of checks and balances.
That effort lost its steam when a similar move in Utah County stoked the ire of Lt. Gov. Deidre Henderson, who called it “insane,” and Utah Sen. Jake Anderegg, who called it a “power grab.”
But the state’s audit found several concerns related to the Uintah County Clerk/Auditor’s Office as well, calling Wilkins’ skills and expertise into question.
Wilkins told The Tribune the commissioners “threw me under the bus,” but referred the newspaper to his written response to the state auditor’s findings.
In that reply, which was briefer and more measured than the rebuttal from commissioners, Wilkins also disagreed with many of the findings related to his office as well as the assessment of his abilities. Still, he noted his office will “strive harder” to track county assets and establish internal controls.
The state’s audit concluded by noting county leadership’s response “highlights the lack of understanding and lack of responsibility” over the county’s financial reporting and oversight, which the auditor called “concerning.”
“While penalties might be imposed,” Dougall told The Tribune, “we hope that our office and other stakeholders can work with various county officials to help Uintah County take appropriate corrective action.”