Audit of Owen County Fiscal Court finds deputy judge See the audit report for Full Details |
Crit Luallen |
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(Frankfort - July 28, 2008)
State Auditor Crit Luallen today released the 2007 audit of the Owen County Fiscal Court, finding that the deputy judge-executive manipulated county payroll records to increase her annual salary by more than $14,000.
The audit has been referred to the Kentucky Attorney General’s Office for further review and possible criminal investigation. The audit found that the county’s financial statements, in all material respects, fairly present the county’s assets, liabilities, and equity arising from cash transactions and revenues received and expenditures paid in conformity with the modified cash basis of accounting Auditors, however, found the pay discrepancy with the deputy judge’s salary after examining several canceled checks. Auditors determined that the deputy judge, who oversees payroll in the office, posted part of her increase in salary to the ambulance salary account code for five pay periods. Auditors discovered four additional checks made out to the deputy judge that were backdated in the system and, as a result, were never posted to the quarterly report. The $14,043 additional payroll the deputy judge paid herself increased her annual salary from $35,000 to just over $49,000. Because of this, the deputy judge received 27 instead of 26 paychecks during the year, with 11 of those paychecks containing a full-month’s salary rather than a two-weeks salary. The auditors performed additional procedures for the 2008 fiscal year and found the same pattern of payroll manipulation from the deputy judge as was found in the 2007 fiscal year. The audit found that the fiscal court had a weak internal control structure because one individual performed almost all accounting functions. Auditors define this as “inadequate segregation of duties” and suggest the fiscal court incorporate more oversight of the county’s financial records. The audit recommends the deputy judge, as the fiscal court’s payroll officer, follow all policies concerning payroll as established by the Owen County Fiscal Court, which should develop segregation of duties over payroll or provide strong oversight. Additionally, fiscal court should seek reimbursement from the deputy judge for the $14,043 overpayment, as well as for the overpayment of matching retirement for incorrect wages reported for the deputy judge. “The Auditor’s Office is constantly emphasizing to county officials across the state the need to implement and oversee stronger controls in their offices regarding payroll and county funds,” Luallen said. “This audit points out the need for those controls.” The Owen County Judge-Executive William O’Banion, responded, “The County Judge-Executive conducted his own internal investigation and found no reason to consider any further action, other than making adjustments to the payroll process. Arrangements have already been made for repayment of said amount.” To adequately protect against misappropriation of assets and/or fraudulent financial reporting, the audit recommends the fiscal court separate the duties concerning payroll. If these duties cannot be segregated due to limited staff or limited budget, the fiscal court should provide stronger oversight to the employee responsible for these duties, according to the audit. Judge O’Banion responded, “Owen County Fiscal Court will contract with ADP for the purpose of processing our payroll.” |
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