Harmon Releases Audit of Ballard County Fiscal Court
Ivan Potter
FRANKFORT, Ky. - State Auditor Mike Harmon has released the audit of the financial statements of the Ballard County Fiscal Court for the fiscal year ended June 30, 2014. State law requires annual audits of county fiscal courts. Auditing standards require the auditor's letter to communicate whether the financial statement presents fairly the receipts, disbursements, and changes in cash and cash equivalents of the Ballard County Fiscal Court in accordance with accounting principles generally accepted in the United States. The Fiscal Court's financial statement did not follow this format. However, the Fiscal Court's financial statement is fairly presented in conformity with the regulatory basis of accounting, which is an acceptable reporting methodology. This reporting methodology is followed for 115 of 120 fiscal court audits in Kentucky. 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. The audit contains the following comments: Material weaknesses over the Health Reimbursement Account resulted in misuse and overpayments. The following findings were noted with Ballard County's Health Reimbursement Account: 2. Prescriptions that were reimbursed more than once, and in some cases up to three times. 5. Lack of proper supporting documentation for reimbursement amounts. 7. The Treasurer failed to produce reimbursement ledgers for fiscal year 2013 and 2014. For those years that did have reimbursement ledgers, the Treasurer failed to post multiple reimbursement checks to those ledgers, causing the true amount of reimbursement not to be shown. 8. Ballard County does not have a formal policy over health reimbursements. Because of the weaknesses and non-compliances that were noted, testing was expanded to include health reimbursements for fiscal years 2011, 2012, 2013, and 2014. Strong internal controls and a written policy governing the Health Reimbursement Account are vital in ensuring that it is accounted for properly, and that all reimbursement amounts are appropriate and qualify under federal guidelines. They are also important in protecting the County's assets and those given the responsibility of accounting for them. Because the County failed to have either in place, the aforementioned findings were allowed to occur. In response to these findings, we make the following recommendations: Due to their severity, the findings noted will be turned over to the Office of the Attorney General of the Commonwealth of Kentucky. 1. Overpayments are being checked by County Attorney. Reimbursements for services not yet received had doctor estimates for monthly payments. 2. Fiscal Court approves medical reimbursements of $500 at the first of each fiscal year. Was unaware of reimbursement forms. This issue has been resolved. To our knowledge all ledgers were given to auditors however 2013 ledger, 3. 2013 quarterly report and several other supportive documents that were given to auditors still have not been found. Auditor's reply: In order to perform testing over the Health Reimbursement Account, auditors requested the treasurer's reimbursement ledgers corresponding to fiscal years 2011, 2012, 2013, and 2014 Ledgers corresponding to fiscal years 2011 and 2012 were provided to auditors. Ledgers corresponding to fiscal years 2013 and 2014 were never provided to auditors, even after multiple requests. According to the county treasurer, these ledgers were missing and never located prior to the end of fieldwork. 4. Overpayment amounts were determined by recapping cancelled checks for fiscal years 2011, 2012, 2013, and 2014, all of which were cosigned by the County Judge/Executive and the County Treasurer.
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