FRANKFORT, Ky. (February 14, 2017) – Mike Harmon, Kentucky’s 47th Auditor of Public
Accounts, today released the first volume of the annual statewide single audit of
the Commonwealth of Kentucky for Fiscal Year 2016 (FY16) that ended on June 30th.
The first volume of the Statewide Single Audit of Kentucky (SSWAK) contains
financial statement findings from the APA’s audit of the Comprehensive Annual
Financial Report (CAFR) and the Schedule of Expenditures of Federal Awards (SEFA).
The SSWAK Volume One report for FY16 has 43 findings with recommendations involving
11 cabinets and state agencies. Two findings were considered material weaknesses
and the other 41 findings are considered significant deficiencies. Of the 43
findings, 21 were repeat findings from the Fiscal Year 2015 SSWAK report.
Among the 41 findings with significant deficiencies, three findings include the
failure of the Kentucky Horse Park to document daily receipts, perform bank
reconciliations, and have adequate procedures over the processing of expenditures.
“The SSWAK findings on the Horse Park came about during our financial statement
audit that we performed in conjunction with the ongoing special examination of the
Kentucky Horse Park, which we began last year after receiving three separate
requests to conduct an examination,” said Auditor Harmon. “We expect to release the
full findings of our special examination of the Kentucky Horse Park in the coming
weeks.”
Another significant deficiency finding in the SSWAK report deals with the Kentucky
Transportation Cabinet’s failure to ensure the right-of-way had been obtained before
construction contracts had been let, specifically the East Brannon Road construction
project in Jessamine County that cost the state $625,000 in damages because the
right-of-way had not been secured before the construction contract was let in late
2015.
“Given how strained Kentucky’s Road Fund has been over the past few fiscal years,
having to pay out hundreds of thousands of dollars in penalties because they failed
to follow existing state law is simply unacceptable, and we recommend KYTC establish
policies and procedures to avoid any future use of tax dollars in this manner,”
added Auditor Harmon. “It also further serves as proof the prior administration let
the construction contract before full right of way had been obtained in violation of
the law, and led to taxpayer money being needlessly spent without any return to
them.”
The two material weakness findings in the SSWAK report deal with issues regarding
the Cabinet for Health and Family Services’ (CHFS) implementation of Benefind, and
the Department for Workforce Investment’s (DWI) financial closing package submitted
to the Finance and Administration Cabinet.
Finding 2016-001 of the 2016 SSWAK report says CHFS did not ensure that Benefind,
which replaced the prior system that determined benefits eligibility and enrollment
for federal and state assistance programs, was working properly before it was put in
place. As of April 2016, approximately 600 defects had been identified in Benefind
since its implementation in February of that same year. The finding also states
that staff for Benefind did not receive proper training before the system went
online.
Finding 2016-002 of the 2016 SSWAK report cites DWI for failing to implement
internal controls over the preparation, review and monitoring of the financial
closing package it submitted to the Finance and Administration Cabinet to include in
the CAFR. If the errors made by DWI had not been detected, accounts receivable
within the Unemployment Insurance fund would have been understated by $12.9 million,
and accounts payable would have been understated by $2.7 million due to the lack of
internal controls and proper review.
The complete SSWAK report, along with the responses to the findings from the various
cabinets and state agencies, can be found on at
http://auditor.ky.gov<http://apps.auditor.ky.gov/Public/Audit_Reports/Archive/2016SSWAK-I.pdf>.
Volume 2 of the SSWAK dealing with federal compliance among state agencies will be
released in March.
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The Auditor of Public Accounts ensures that public resources are protected,
accurately valued, properly accounted for, and effectively employed to raise the
quality of life of Kentuckians.
Call 1-800-KY-ALERT or visit our website to report suspected waste and abuse.