CATLETTSBURG The audit of the financial statement of the Boyd County Fiscal Court for the fiscal year ending on June 30, 2017 includes eight separate findings.
Boyd County Judge Executive Eric Chaney, who entered his position in January, said each finding has either been addressed or is in the process of being addressed, noting he feels it is a good audit for the county.
“(The previous court) started building a good foundation to move forward financially for Boyd County ... they started pouring the foundation and we're laying the groundwork and going with what they set,” he said.
Kentucky State Auditor Mike Harmon completed the audit. The fiscal court accepted the findings at their last meeting.
County Commissioner Larry Brown noted that three of the eight findings were related to the jail.
“Six of (the eight findings) were repeat findings, which I thought was interesting,” he said.
The audit includes the following findings:
- The fiscal court did not report employer-provided vehicles as a taxable fringe benefit and does not have written procedures in place to address the use of the vehicles
The audit notes this is a repeat finding and was included in the 2016 year audit report.
“There are 18 county employees that drive an employer-provided vehicle. This benefit was not included as a taxable fringe benefit on these employees’ IRS W-2 forms,” the audit states. “Also, the county's administrative code does not address employee use of county-owned vehicles, and there are no mileage or gasoline logs maintained.”
The county judge/executive/treasurer's response states that all employer-provided vehicles are now included as a taxable fringe benefit on applicable employees. A policy was adopted in January that prohibits employees from taking cars home with them, except for a few exceptions approved by the Fiscal Court.
- The county’s Fourth Quarter Report reported a negative balance in the jail fund of $70,031 as of June 30, 2017
This was another repeat finding from the 2016 report. The audit notes a payroll check in the jail fund was written by mistake, never cleared the bank and should have been voided.
“The county treasurer did not void a $63,393 check that was issued in error in August 2016. The check continued to appear as an outstanding check of the jail fund as of the June 30, 2017, thus lowering the reconciled balance on the bank reconciliation. This appears to have been caused by an error that was not corrected prior to the audit. The fiscal court did not question why this check remained on the outstanding check list when they reviewed the monthly reports, nor did they question the negative jail fund balance as of June 30, 2017. As a result, the jail fund reported a negative balance of $70,031 on the Fourth Quarter Report at year-end,” the audit states.
The county judge/executive's response states that Boyd County Treasurer Patty Ball is closely monitoring jail and all bank statements to ensure there are no negative fund balances reported.
- The county judge/executive and county jailer received more than the maximum salary set by the Department for Local Government
The audit notes that the fiscal court paid the county judge/executive and the county jailer more than the maximum salary set by the DLG for the calendar year 2016.
“The issue occurred due to 2016 having 27 pay periods rather than 26 pay periods which only occurs once every 11 years. As a result the fiscal court is not in compliance with the salary requirements, and the county judge/executive owes the county $3,410.20 and the county jailer owes the county $3,892.02,” the audit states.
The recommendation in the audit states that the court should request a payment from the county judge/executive in the amount of $3,410.20 and the jailer in the amount of $3,892.02 for the overpayments. Chaney said this was paid back before the end of 2017.
The county judge/executive's response states that Ball has posted a maximum salary on affected county officials in Paycor (the county's new payroll system) to prevent this from ever happening again.
- The fiscal court did not accurately report debt on the quarterly financial statement
This was another repeat finding from the 2016 report.
“The liabilities section of the fourth quarter financial statement (which also serves as the county’s year-end financial statements) did not reconcile to the county’s debt schedules, materially misstating debt obligations. This occurred due to lack of oversight of the quarterly financial statement preparation process,” the audit states. “As a result, liabilities information is not accurately presented to management, regulatory agencies, and other users of the information. The principal balance of debt as of June 30, 2017, was understated by $12,884,352 and the interest balance of debt as of June 30, 2017, was understated by $1,830,993.”
The county judge/executive's response states that the DLG is working to give treasurers a ruling on how to report debt that the counties do not directly pay.
- The county’s capital assets are not being reported properly
This was another repeat finding from the 2016 report. Auditors were not provided a complete and accurate capital asset schedule, the audit notes.
The county judge/executive's response states that the fiscal court now has a capital assets inventory system implemented on its computer through IWorks so that every department can upload their inventory to a central location.
- Duties are not adequately segregated over receipts and reconciliations
This was another repeat finding from the 2016 report. The audit noted that during the 2017 fiscal year the county treasurer prepared and deposited receipts, posted receipts and disbursements to the accounting system, maintained the purchase order listing, prepared checks for disbursement, prepared monthly reports for the fiscal court and quarterly reports for the DLG, made cash transfers between funds and bank accounts, and performed bank reconciliations for all bank accounts.
“While some compensating controls are in place, including the preparation of a receipts log by the finance officer and the review of prepared checks by the county judge/executive or his designee, they are not sufficient,” the audit states.
The county judge/executive's response states that the fiscal court has added a part-time clerical employee for the Judge's office to help out as needed.
- The jail lacks adequate segregation of duties over jail commissary transactions
This was another repeat finding from the 2016 report. The audit notes that a control deficiency occurs when someone has custody over assets and the responsibility of recording financial transactions.
“The bookkeeper for the jail commissary prepares deposits, prepares daily checkout sheets, and posts to the receipts ledger. In addition, the bookkeeper prepares monthly collection and disbursement reports, posts to the disbursements ledger, and prepares monthly bank reconciliations,” the audit states. “The jailer has been informed of this issue and has failed to segregate duties or to implement and document compensating controls sufficient to offset the weakness noted.”
The county jailer's response states that a review will be conducted by an outside source periodically.
- Payroll account not properly reconciled
The audit notes that the spreadsheet used to transfer monies for health insurance to the payroll account for payment contained an incorrect formula.
“As a result, the payroll account accumulated a large balance in it and county personnel could not determine why,” the audit states. “In theory, the payroll account should always reconcile to zero as it is an imprest account. Therefore, cash was understated and insurance expense was overstated on the quarterly reports for the General Fund, the Road Fund, and the Jail Fund for Fiscal Year 2017. As a result an adjustment was necessary to the Fourth Quarter Report to increase cash and reduce insurance expense in the amount of $339,621 for the General Fund, $61,271 for the Road Fund, and $83,346 for the Jail Fund.
The county judge/executive's response states the amounts were transferred after year-end and that the formula error was corrected as of July 1, 2017.