Luallen Releases 2006, 2007 Audits of See the audit report for Full Details |
Crit Luallen |
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(Frankfort - April 8, 2008)
State Auditor Crit Luallen today released the audits of the Leslie County Fiscal Court for the 2006 and 2007 fiscal years, which found weak oversight in county financial management, a high risk of fraud and a failure to provide auditors with requested documentation regarding more than $1.1 million in federal disaster relief funds.
The audits were referred to the Kentucky Attorney General’s Office, the Leslie County Attorney’s Office and the Kentucky Department of Military Affairs for further review. Military Affairs Emergency Management Branch is being asked to review the audit because the county failed to provide auditors with documentation on more than $1.1 million in FEMA grants for disaster relief in 2006 ($849,900) and 2007 ($287,933). Federal law requires counties to document grant usage. Concerning the 2006 audit, current Leslie County Judge-Executive Jimmy Sizemore told auditors that “although this all occurred under a previous administration, we are in the process of completing the records to satisfy” the FEMA requirements. Auditors found in the 2007 audit “that some documentation” is being kept by the county; however, due to the state of recordkeeping concerning the FEMA funds, the county should hire a grants management administrator. Sizemore said, “We will comply,” according to the report. Additionally, auditors issued a “disclaimed opinion,” meaning they cannot give assurance on the accuracy of the financial statements of the fiscal court in 2006 and 2007. This is the fourth consecutive year (2004, 2005) the auditor’s office has issued a disclaimed opinion after auditing the Leslie County Fiscal Court. Many concerns found in the 2006 and 2007 fiscal court audits were also found in the 2004 and 2005 audits. “We have continually raised concerns over the last four years with the inability of the former Leslie County judge-executive to responsibly handle the taxpayers’ money,” Luallen said. “We are hopeful that the current county judge will see the importance of implementing our findings and properly manage this office.” The Kentucky State Auditor’s Office, as part of its annual audits of every county fiscal court, must comment on any non-compliance by these governmental bodies in regards to laws, regulations, contracts and grants, along with material weaknesses involving the county’s financial operations and reporting. Luallen’s office contracted with the firm of Peercy and Gray, PSC, on these audits. Auditors found 12 areas of concern in 2007 that were first mentioned in the 2006 audit. The auditor’s office referred the audits to Kentucky AG’s Office and the Leslie County attorney for several questionable spending issues. Both years, auditors questioned the use of the former county judge-executive’s credit cards and how fiscal court handled various employees’ spending. 2006 Of the $19,926 in credit card purchases charged during the fiscal year 2006, the auditors could not determine the appropriateness of $15,028 due to lack of documentation. Auditors found that county employees used the former judge-executive’s credit cards, and while fiscal court gave permission to these employees, it did not reconcile these credit card receipts to the credit card statements to ensure proper use of the credit cards. The audit recommends the county attorney’s office review these transactions to determine whether restitution should be made. The attorney general and county attorney are also asked to look into other spending by county employees, including a case where a constable was reimbursed for several gas and auto repair receipts that were signed by his wife. Auditors also found $1,281 in purchases charged in California during September 2005 with no supporting documentation. The fiscal court was unable to provide any records or reason for this trip, according to the audit. Auditors found $4,898 in credit card bills that had supporting documentation but questioned the use of the county’s credit cards for the following purchases: a cell phone having no known user or purpose, fuel and meal receipts, lodging bills that include the cost of movies and various purchases that gave no purpose or the purpose was illegible on the written documents. Additionally, auditors questioned the county’s use of county-owned cell phones and vehicles for personal business. Auditors found that the former judge-executive removed emergency lights from a Chevrolet Tahoe paid for with Homeland Security funds and gave the lights to the Leslie County sheriff. These instances and others like them documented in the audit question the county’s oversight and monitoring of local ethics laws. 2007 Of the $20,126 in credit card purchases charged during the 2007 fiscal year, auditors could not determine the appropriateness of $9,076 due to lack of supporting documentation, according to the audit. While $11,051 in credit card bills had supporting documentation, auditors questioned several items: $1,134 in meal receipts that did not cite a purpose; $61 for in-room hotel movies; $1,991 of supporting documentation that only included a packing slip and $110 in fuel receipts with no evidence of proper vehicle-usage. Additionally, auditors found a $1,180 charge on a county credit card from Chicago in August 2006 for hotel accommodations for a “non-employee” of Leslie County. The audit states that the former county judge attended a NACO (National Association of Counties) conference at the same time. Auditors verified that this person was a “non-employee” of the county through payroll records and inquiries, according to the audit. The audit recommends the county attorney’s office review these 2007 fiscal year transactions to determine whether restitution should be made. Both audits found several different signatures of the former judge-executive’s name on written county checks: nine different signatures in 2006 and seven different in 2007. According to the audits, the former judge-executive gave written permission to two employees to sign his name. Auditors found the need for proper accounting procedures in this area to decrease the risk of misstated financial statements due to errors or omissions from improper reporting or fraud. Several other areas of responsibility by the fiscal court for fiscal years 2006 and 2007 were questioned in the audits. These include the handling of approximately $1.8 million each year in local government economic assistance money, which 30 percent is to be spent on the coal haul road system in the county, and the oversight of ambulance franchise collections. |
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