Auditor recommends better internal controls, procurement practices for Inland Port Authority
Dec 22, 2023, 4:19 PM | Updated: 4:29 pm
(Used by permission, Utah Inland Port Authority)
(Used by permission, Utah Inland Port Authority)
SALT LAKE CITY — The Utah Inland Port Authority lacks internal controls that resulted in noncompliance with revenue bond reporting requirements in 2023 and needs to revamp its procurement policy to conform with best practices, according to a report released by the state auditor Thursday.
The state auditor’s office released a pair of reports on the Utah Inland Port Authority, after examining its financial statements and procurement practices. The procurement audit found “weaknesses” in the authority’s policies, while the annual financial audit noted “significant deficiencies” including “errors in preparing the financial statements and not complying with bond reporting requirements,” a news release from the office stated.
The procurement audit was based on a complaint called in to the office’s hotline.
“Given the public’s expectations for the Utah Inland Port Authority, it is critical that the authority continue to strengthen its internal controls and its procurement policies and practices,” state Auditor John Dougall said.
Auditors recommend that the authority follow state procurement code when it comes to securing contracts, even though the authority is exempted from the rules governing most government agencies.
The report notes that “these statutory exemptions reduce transparency, oversight, and accountability for these types of entities. Thus, it is vital that exempted entities develop strong policies and procedures.” It recommends the authority review its procurement policy and consider including portions of the state code in its policy.
Auditors also suggested removing a policy provision governing “very specialized or confidential services,” which they say are inconsistent with best practices.
The financial audit found that the Inland Port Authority “does not have adequate internal controls” to ensure certain expenses are “properly reported in the financial statements in accordance with generally accepted accounting principles.”
Because of this, the report states that several adjustments were made to the authority’s financial statements, including adjustments of $4,037,365 for lease liabilities, $808,594 for pension liability, $307,326 for pension expenses, and $345,722 to another pension account.
“These adjustments occurred due to turnover of key financial positions in fiscal year 2023, inadequate review and analyses, and inadequate understanding in the preparation of the financial statements,” according to the audit.
It also found that the authority was not in compliance with revenue bond reporting requirements in fiscal year 2023, after submitting a pair of reports several months after the deadline.
The Utah Inland Port Authority agreed with the findings and recommendations of the financial audit and said it is working to remedy the findings.
“These audits are critical to the ongoing improvements that UIPA has been working through over the last 14 months,” said Ben Hart, executive director of the authority. “We take the state auditor’s findings seriously and are fully committed to implementing necessary improvements. Enhancing our processes and maintaining the highest standards of accountability and transparency is our top priority.”
A legislative audit completed last year found a few similar concerns, including “financial commitment without adequate planning, gaps in organizational structure that reduce internal controls, and the need for stronger procurement and contract management,” and a similar report from the Utah Office of the State Auditor shortly after said the authority should adjust its contract policy, which auditors said “lacks adequate transparency and accountability.”
That report also noted that auditors were concerned that Utah Inland Port Authority President Jack Hedge was given “sole discretion” to make decisions on contracts. This resulted in sole-source contracts making up 80% of all inland port contracts, including a deal with a vendor started by one of Hedge’s former co-workers, according to auditors.
Hart, who took over as executive director of the Utah Inland Port Authority last year, told lawmakers in January there was “some super sketchy crap going on at the inland port,” but said changes were already in motion.
