Auditor Of Public Accounts
Knox County Audit Report Released – Disclaimed Opinion with 63 Findings; $2.7 Million in Questioned Expenditures: ’03, ’04, ’05 Fiscal Year Audits Referred to Multiple Agencies
State Auditor Crit Luallen today released the report of the Knox County Fiscal Court audits for the fiscal years 2003, 2004, and 2005, covering the time period between July 1, 2002 and June 30, 2005. The three audits were released together because some of the findings uncovered in the 2003 audit were repeated in subsequent years. The report revealed 63 findings and questioned expenditures of nearly $2.7 million. The Auditor’s Office disclaimed an opinion on the county’s financial statements because the risk of fraud was deemed too high; serious weaknesses were discovered in internal procedures and accounting practices; and Knox County failed to provide a management representation letter. A disclaimed opinion means the Auditor’s Office cannot give assurance on the accuracy of the County’s financial statements.
The report discovered questionable expenditures and banking practices that warrant further investigation by law enforcement. Checks totaling $333,886 in payments made by Knox County directly to certain vendors were not deposited into the accounts of the payee companies but were endorsed by companies in which relatives of the County Judge serve as officers. Some checks were written to a company that paid no occupational tax to Knox County. In addition, a representative of one of the payee companies indicated that the company received no payment and performed no service for the County. Some of the payments were for various federal, state, and county projects for which no contracts were executed or purchase orders issued.
The County may also owe the United States Department of Transportation $134,090 for overpaying a contractor by that amount using Federal Transportation grant money. Two invoices for a “tractor crawler” were billed for $85,805 each. However, one invoice stated that the service was done at “180 hours at $112 per hour” which equals $20,160. The other invoice states that the service was provided at “155 hours at $112 per hour” which equals $17,360.
“Serious problems were uncovered in this report that need further investigation. Public service is a public trust and should be conducted in a professional, competent manner. Audits like these highlight the critical need for a strong, independent agency to protect the taxpayer’s money.” State Auditor Crit Luallen said.
The report also found that Knox County did not follow proper payroll procedures, didn’t provide uniform health care coverage to its employees, and provided incomplete supporting documentation for asphalt expenditures.
The numerous of findings led the State Auditor’s Office to refer the audits to several federal and state agencies for further investigations. The audits were referred to the Federal Bureau of Investigation, Kentucky Attorney General’s Office, Cumberland Valley Board of Ethics, Governor’s Office for Local Development, Kentucky Department of Revenue, Kentucky Transportation Cabinet Office of the Inspector General, Knox County Attorney, and the Kentucky Office of Financial Institutions.