Auditor Of Public Accounts
Audits of Owsley County Clerk Uncover Pattern of Large Shortages Followed by Unidentified Cash Deposits

Press Release Date:  Thursday, May 04, 2006  
Contact Information:  Jeff Derouen
Phone: (502) 573-0050
Fax: (502) 573-0067
Pager: (888) 222-5670

State Auditor Crit Luallen released two audits, covering calendar years 2004 and 2005, of Owsley County Clerk Sid Gabbard’s Office.  The Auditor’s Office disclaimed an opinion on the financial statements of the Clerk’s office because the Clerk did not maintain adequate accounting records to allow the auditors to verify the revenues and expenditures for the years audited.
The 2004 audit uncovered a $61,876 shortfall as of December 31, 2004.  A monthly sample test, conducted on receipts and deposits in March 2004, showed undeposited receipts of nearly $18,000. Undeposited receipts are monies received by the Clerk’s office but not deposited into any of the office’s accounts.

Between February and July 2005 the Clerk made $52,200 in unidentified cash deposits.  However, a surprise cash count conducted by the Auditor’s Office on August 31, 2005 showed a shortage of nearly $50,000.  In September 2005 Mr. Gabbard deposited personal funds of $58,391 into the Clerk’s office account. 

As of February 28, 2006 the Clerk’s office owed several Owsley County taxing districts $10,776, including over $4,000 to the Board of Education.  Mr. Gabbard responded in the audit, “All monies have been paid.  All shortages corrected.  All disbursements have been made.”

A cumulative shortage of over $65,000, partially offset by the personal and unidentified deposits, was discovered at the end of 2005.  Auditors believe this shortage was partially due to “receipts of one year being used to cover expenditures of previous years.”  Checks due taxing districts were written by the Clerk’s office but not mailed and were held by the Clerk for long periods of time.  The procedure of using current year receipts to offset prior year deficits, prohibited by KRS 68.210, continued into the current calendar year.

“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 audits also discovered that the Clerk received nearly $550 over the maximum salary authorized, failed to deposit funds into an interest bearing account, and that the Clerk’s office appeared to use its United Parcel Service account for private citizens.  No documentation was provided for UPS expenditures and an auditor witnessed an unidentified individual send bean seed using the Clerk’s account.

The audits have been referred to the Owsley County Attorney, Henley McIntosh, for the recovery of money owed the various taxing districts in the county.  The audits have been referred to the Office of the Attorney General for further investigation.

The Louisville CPA firm of Peercy and Gray under a contract with the State Auditor’s Office conducted the audits.  The audits are reviewed by audit managers employed by the State Auditor’s office.  The audits are then released under cover of the Office of the Kentucky Auditor of Public Accounts.