Auditor Of Public Accounts
State Auditor releases audit of oversight of 3 contract vendors used by the state to administer CATS

Press Release Date:  Tuesday, January 13, 2009  
Contact Information:  Contact: Communications Director
Phone: (502) 573-0050
Fax: (502) 573-0067Email:

State Auditor Crit Luallen today released an audit requested by the legislature of the oversight of three contract vendors used by the Kentucky Department of Education (KDE) to implement the Commonwealth Assessment Testing System (CATS).


The audit identifies nine findings and offers specific recommendations to KDE toward strengthening its controls and oversight of the contracted services. 


Luallen’s Office presented the audit findings to the Legislative Research Commission’s Government Contract Review Committee, which requested the audit in July 2008. 


“Overall, our audit finds that the department has improved its monitoring of these vendors,” Luallen said. “However, based on the audit findings, we make a number of recommendations to strengthen oversight and ensure greater accountability.”


The department agrees with most of the findings and notes where improvements have already been made in its response to the audit. The complete audit report can be viewed at

At the committee’s request, Luallen’s Office reviewed state contracts with Measured Progress (Dover, New Hampshire), HumRRO (Alexandria, Virginia), and William Auty (Corvallis, Oregon) – vendors used by the Office of Assessment and Accountability (OAA) within KDE to implement and administer the primary components of CATS.

According to the audit, the state paid the three vendors a total of more than $14 million in fiscal year 2008.  Evidence reviewed demonstrated that all services were received from the vendors.

Measured Progress was paid nearly $13.4 million to develop, print and score customized tests based on the requirements of KDE and the Kentucky Board of Education (KBE). 


HumRRO was paid $657,658 to conduct reliability and validity of the test materials and test scoring. William Auty was paid $80,225 to provide on-call expertise in psychometrics and advise KDE on its assessment program.

The audit recommends that the state gain greater accountability over vendor work by requiring additional details on invoices to determine that work was completed.

Auditors found that invoices from Measured Progress do not sufficiently describe services provided and that contract requirements are not reconciled to invoices.

Invoices submitted by HumRRO to KDE do not reflect the specific report or service completed, while William Auty invoices only provide the total hours worked and do not detail the hours spent on each service performed.

Auditors also recommend that KDE develop and implement improved procedures for reviewing the invoices prior to payment and for determining that the payment does not exceed the true cost of the service. 

In one instance, KDE overpaid HumRRO $58,400 for services because the vendor’s invoice was not adequately reviewed.

Auditors also found that a KDE administrative error necessitated that the contract with Measured Progress be modified nearly $3.5 million.

The error occurred after a $3,483,816 electronic transfer fund payment to Measured Progress was returned after being sent to the wrong bank account. Because the state’s electronic financial system wouldn’t allow the department to correctly account for the error, KDE had to modify the vendor’s contract in order to reissue payment.

Auditors recommend that KDE obtain written verification of vendor account numbers and thoroughly document any future contract modifications - including communicating contract changes to the legislative contract review committee.

Other audit findings include:
• A significant number of payments to Measured Progress and HumRRO were made from accounts not in the contract documentation.

• KDE monitors Measured Progress contract deliverables through frequent communication but the communication is not documented in sufficient detail to ensure proper monitoring of the contractor’s performance.
• KDE would benefit from hiring a fulltime psychometrician rather than contracting by the hour.
• Not all of Kentucky’s assessment related expenditures are tracked.
• Third grade norm-referenced tests are not currently used in accountability scores.
• The National Technical Advisory Panel on Assessment and Accountability (NTAPAA) last met in 2007 and is not currently funded.