Auditor Of Public Accounts
Knott County ’05 Audit Finds Same Problems as ’04. 23 Findings, Over $400,000 New Questioned Cost; Problems During Term of Previous County Judge

Press Release Date:  Monday, August 21, 2006  
Contact Information:  Jeff Derouen
Phone: (502) 573-0050
Fax: (502) 573-0067
Pager: (888) 222-5670

State Auditor Crit Luallen released the Knott County audit for the fiscal year ending June 30, 2005.  Many of the same findings that led auditors to question over $1 million in expenditures in the 2004 fiscal year audit were repeated into the 2005 fiscal year.   The financial impact of the previous findings dealing with county vehicles, related party transactions, and the construction of a still uncompleted pool project carried into the 2005 fiscal year.  The time frame of the audit was during the administration of former County Judge / Executive Donnie Newsome who left office on September 30, 2005.

As in 2004, The Auditor’s Office disclaimed an opinion on the county’s financial statements because the risk of fraud was deemed too high and serious weaknesses were discovered in internal procedures and accounting practices.  A disclaimed opinion means the Auditor’s Office cannot give assurance on the accuracy of the County’s financial statements.  The audit has been referred to Attorney General’s Office, Kentucky Division of Emergency Management, Governor’s Office of Local Development, Kentucky Department of Revenue, and the Commonwealth’s Attorney for the 36th Judicial Circuit.

“The Knott Count audit for fiscal year 2005 continues to show serious mismanagement of public funds during that year.  The citizens of Kentucky deserve government with integrity at every level.  I am hopeful that the next audit, under new Judge Randy Thompson, will show marked improvement.” State Auditor Crit Luallen said.

In addition to the continued problem with the pool and county vehicles the audit uncovered several new issues.  The audit uncovered that Judge Newsome’s official credit card was used to make $4,025 in purchases while the Judge was incarcerated.  Also the audit questioned $434,618 of Federal Emergency Management Agency Funds due to non – compliance with statutes, contracts, and administrative regulations. During the audited year the Knott County jailer did not have a bond in accordance with KRS 71.010.  This matter has been turned over to the Commonwealth’s Attorney for further action. 

The audit also uncovered that the Knott County Fiscal Court approved a land swap between county owned land and .04 acres of land purportedly owned by the County Attorney and the former County Treasurer’s brother.  The .04 acres is on the pool property and the deed for that property does not indicate any portion of it being owned by anyone other than the county.  An independent survey and title exam is needed to ensure that Knott County Fiscal Court does not trade public land for land it already owns.