Clinton County Sheriff's Audits Find Serious Concerns:
State Police Involved in Investigation

Crit Luallen
Auditor of Public Accounts
105 Sea Hero Road, Suite 2
Frankfort, KY 40601

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State Auditor Crit Luallen said, "Through the hard work of auditors we have been able to document several serious issues within the Clinton County Sheriff's Office. We have forwarded this information to both the Attorney General's Office and the Kentucky State Police. We stand ready to assist in any way needed. For the sake of the citizens of Clinton County I hope that future audits will show that these problems have been corrected."

The Sheriff's 2002 Tax Settlement audit found $34,498 of undeposited receipts. These receipts were taxes collected by the Sheriff's Office but not deposited into any of the Sheriff's Office's bank accounts. In addition, Sheriff Kay Riddle notified the Kentucky State Auditor's Office that a theft had occurred in his 2003 tax account, which has not yet been audited.

The tax audit also showed that consistent underpayments by the Sheriff to various Clinton County taxing districts from 1997 through 2002 now total $108,251. This includes $78,601 owed the Clinton County School System and $10,874 owed to the Clinton County fiscal Court. The Sheriff's Office also owes the Clinton County Health Department $8,766. The Sheriff's fee audit exposed, as of December 31, 2002, a cumulative deficit of $25,979 in the operations of his office. The Sheriff also owes the Clinton County Fiscal Court excess fees of $42,403 based on the 2000, 2001, and 2002 calendar years. Additionally, the Sheriff's Office owes $21,372 to the Federal Internal Revenue Service for federal withholdings.

During the review, Auditor's office staff contacted the Kentucky State Police who began an active investigation of the Clinton County Sheriff's Office. In addition, audit findings were referred to the Attorney General's Office, the Internal Revenue Service, the Kentucky Department of Revenue, and the Kentucky Retirement System. The audits take into account pending litigation between the Clinton County Sheriff's Office and the Clinton County Fiscal Court.

As part of the audit process, the Auditor must comment on non-compliance with laws, regulations, contracts and grants. The Auditor must also comment on material weaknesses involving the internal control over financial operations and reporting. Complete audit comments follow.

NOTE: State Police inquiries should be directed to Captain Brad Bates at 502-695-6344. Both reports are posted on the internet at the following site: www.auditor.ky.gov

Summary of Audit Findings

Audit of Clinton County Sheriff's Office

The Office of Auditor of Public Accounts issued a qualified opinion on the financial statement taken as a whole. The Sheriff's attorney did not provide us with a legal representation letter as required by auditing standards generally accepted in the United States of America. Except for the effects on excess fees, if any, of any matters that might have been disclosed had the legal representation letter been provided to the Auditor's Office, the Sheriff's financial statement presents fairly the receipts, disbursements, and excess fees of the Clinton County Sheriff in conformity with the modified cash basis of accounting.

The audit contains the following comments:

• The Sheriff should not have a deficit of $25,979 in his official fee account as of December 31, 2002.
• The Sheriff should pay excess fees of $42,403 to County Treasurer for calendar years 2000, 2001 and 2002.
• The Sheriff should maintain deputy sheriff salaries within the maximum amount set by Fiscal Court. This is a requirement that Kentucky statutes require of all Fiscal Courts.
• The Sheriff should properly report wages and withholdings.
• The Sheriff's Office should submit a report to the Fiscal Court for reimbursement of the employer's share of FICA in a timely manner.
• The Sheriff should prepare and publish an annual settlement.
• The Sheriff should obtain reimbursement from the state for expenses.
• The Sheriff should properly remit carrying concealed deadly weapon permits.
• The Sheriff should require timesheets for all employees.
• The Sheriff should prepare and submit quarterly financial reports to the Department for Local Government.
• The Sheriff's office has a lack of adequate segregation of duties.
• The Sheriff should improve internal control over financial reporting.

Audit of Clinton County Sheriff's Tax Settlement

The Office of Auditor of Public Accounts issued a qualified opinion on the Sheriff's Tax Settlement. The Sheriff's attorney did not provide us with a legal representation letter as required by auditing standards generally accepted in the United States of America. Except for the effects of any matters that might have been disclosed had the legal representation letter been provided to the Auditor's Office, the Sheriff's financial statements fairly present the taxes charged, credited and paid, as of October 10, 2003, in conformity with the modified cash basis of accounting.

The audit contains the following comments:

• The Sheriff should eliminate the $37,070 deficit in his tax account.
• The Sheriff should not have a shortage in his 2002 tax account.
• The Sheriff should remit $108,251 to the taxing districts.
• The Sheriff should distribute tax collections by the tenth of each month.
• The Sheriff should distribute interest earned on tax collections monthly.
• The Sheriff should deposit funds intact on a daily basis.
• The Sheriff should record all tax collections on a receipts ledger.
• The Sheriff should prepare a tax settlement by September 1.
• The Sheriff should publish the tax settlement.
• The Sheriff should conduct a sale of delinquent tax bills by April 30 and file all certificates of delinquency in the clerk's office immediately upon completion of the tax sale.
• The Sheriff should pay advertising costs to the Fiscal Court.
• The Sheriff should transfer any delinquent franchise tax bills to County Clerk.
• The Sheriff should prepare monthly bank reconciliations.
• The Sheriff shall not apply or use any money received by him for any purpose other than that for which the money was paid or collected.
• The Sheriff's office has a lack of adequate segregation of duties.
• The Sheriff should improve record keeping procedures.
• The Sheriff should have computer disaster recovery/contingency plans.
• The person operating the computer system should have adequate training.

The Sheriff's responsibilities include collecting real estate taxes, providing law enforcement and performing services for the county Fiscal Court and courts of justice. The Sheriff's office is funded through statutory commissions and fees collected in conjunction with these duties.

Crit Luallen
Auditor of Public Accounts
105 Sea Hero Road, Suite 2
Frankfort, KY 40601
WEB: www.auditor.ky.gov/