Auditor Of Public Accounts
State Auditor Crit Luallen's Office Examines Inmate. Payroll Processing at Kentucky Correctional Industries

Press Release Date:  Tuesday, April 22, 2008  
Contact Information:  Contact: Communications Director
Phone: (502) 573-0050
Fax: (502) 573-0067Email:

Through a special examination, the Office of Kentucky Auditor Crit Luallen found that over a 13-month period (January 2007-January 2008) a Kentucky State Reformatory work computer at Kentucky Correctional Industries (KCI) was used in an apparent theft of $6,877 that benefited 21 inmates.

The auditor’s office discovered the apparent theft after working with the Kentucky Department of Corrections to examine the agency’s inmate payroll processing system. The investigation originated after an anonymous caller used the auditor’s public hotline to question KCI inmate labor reimbursements.

“As the independent watchdog for taxpayers’ money, my office treats every hotline call regarding possible cases of mismanagement and abuse very seriously,” Luallen said. “In this case, we appreciate the assistance and the cooperation we received from Corrections staff as we reviewed this allegation at correctional industries.”

Kentucky Correctional Industries is located at the Kentucky State Reformatory in LaGrange and houses six active industrial plants employing 175 inmates. During the examination, IT auditors found that significant computer expertise was used to manipulate the payroll data at KCI to create higher payments on 21 inmate commissary accounts.

Based on the review, auditors recommend that KCI gain better oversight and control of the inmate payroll system and examine other pay periods to ensure additional theft or discrepancies do not exist. At the same time, auditors suggest the Department of Corrections implement many well-known principles in information security to prevent theft at this and other institutions in the future.

Corrections Commissioner LaDonna Thompson, in a letter to Luallen, said her office reviewed the recommendations and will take strong measures to implement them.

Due to the nature of some of the findings, the examination report was referred to the Kentucky State Police. For a complete copy of the report, visit