75 Findings in Jackson County Audits

Mike Harmon, Kentucky’s 47th Auditor of Public Accounts, announced today his office’s audits of the Jackson County Fiscal Court for Fiscal Years 2015 and 2016 have a combined 75 findings. Findings concerning over payments to the county’s former treasurer will be referred to the FBI, Kentucky Attorney General, Kentucky State Police, and the Kentucky Department of Revenue.

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The full audit reports can be found at:

2015 audit report

2016 audit report

“Taxpayers in Jackson County and across the Commonwealth should be thankful for our auditors who work hard each day to bring greater accountability and transparency to them. We urge Jackson County’s current fiscal court to move forward by bringing change to how their local government has operated in the past,” Auditor Harmon said. “We are referring both audits to federal and state law enforcement agencies because of the egregious conduct of the former county treasurer who improperly made numerous payments to herself.”

State law requires annual audits of county fiscal courts. Auditing standards require the auditor’s letter to communicate whether the financial statements presents fairly the receipts, disbursements, and changes in fund balances of the Jackson County Fiscal Court in accordance with accounting principles generally accepted in the United States of America. The auditor’s letters express disclaimed opinions, meaning we cannot express an opinion on the financial statements of the county due to the unreliability of the county’s financial records.

Audit evidence indicates abuse and intentional override of internal controls by an employee that had a material effect on the county’s financial statements in 2015 and 2016. The fiscal court had serious weaknesses in the design and operation of its internal control procedures and failed to establish appropriate management oversight of the county’s financial activities. The absence of internal control and management oversight created an environment in which funds were misappropriated and financial records were manipulated.

The Auditor of Public Accounts was also engaged to audit the compliance of the Jackson County Fiscal Court with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could have a direct and material effect on its major federal program for Fiscal Years 2015 and 2016. The Jackson County Fiscal Court did not comply with federal compliance requirements regarding CFDA #97.040. Due to the unreliability of the underlying financial records, auditors were unable to express an opinion on the compliance requirements described in the U.S. OMB Compliance Supplement.

As part of the audit process, the auditor must comment on noncompliance with laws, regulations, contracts, and grants. The auditor must also comment on material weaknesses involving the internal control over financial operations and reporting.

The 2015 audit contained 35 findings. The 2016 audit contained 40 findings, including 35 findings repeated from 2015. The audits identified, among others, the following issues in 2015 and 2016:

“When I became Auditor, my directive to staff was simply to follow the data. The dedication of our auditors is exemplified by the large number of findings from these two audits,” Auditor Harmon added. “The citizens of Jackson County deserve better from those entrusted to handle the people’s business, and my office will continue the work necessary to shed light on those who abuse the public’s trust.”