Auditor Of Public Accounts
State Auditor Crit Luallen Releases Report on Three Forks Regional Jail Authority
State Auditor Crit Luallen released an audit and review of the Three Forks Regional Jail located in Beattyville. The audit raises serious doubts about the jail's ability to be self-sustaining. The Governor's Office for Local Development and Board Chairman Richard Adams requested the report. An interlocal cooperation agreement between Lee, Owsley, and Wolfe Counties, established the Authority and allows the facility to operate.
"Without better oversight and planning the three counties will need to continue to subsidize the Three Forks facility based upon the proportional share created in the original interlocal agreement," State Auditor Crit Luallen said.
The reports contained eleven comments and recommendations. In addition to the substantial doubt of the Three Forks Regional Jail Authority's ability to continue to operate within the current financial structure, the other comments include the authority's default on their debt service reserve account, lack of adequate oversight or monitoring of financial activities, discrepancies in payroll, and the failure to adequately oversee jail construction.
The audit indicated the jail had an operating loss of $68,665 for the fiscal year ending June 30, 2004. However, the Auditor's Office's review of subsequent events discovered that, as of May 27, 2005, the Jail Authority has $135,343 in outstanding and past due bills. To alleviate the default on the Authority's debt service reserve account, Lee, Owsley, and Wolfe Counties agreed to apply $500,000 in coal severance tax monies appropriated by the Kentucky General Assembly. As of May 27, 2005 the balance on that one time, non-replenishing account was $40,274. If the June 1, 2005 debt service payment were made from this account the remaining balance would be $1,864.
The audit recommends that the Jail Authority and participating counties take critical steps to address the funding shortage. The audit continues, "The board and participating counties need to revisit the fiscal structure of the authority and put measures in place to ensure obligations are met timely and appropriately." The Governor's Office of Local Development is providing ongoing technical assistance to the Authority.
The audit also discovered that the authority did not provide adequate oversight or monitoring of financial management activities. This included inadequate or missing supporting documentation for purchases and payments and a lack of proper accounting practices and internal controls.
The report included both an audit and a review. The audit covered the fiscal year ending June 30, 2004 and the review of construction related costs and specified financial statement assertions covered fiscal years 2002 and 2003.
NOTE: Responses from the Three Forks Regional Jail Authority are contained in the report.