Former Whitley County Sheriff Colan Harrell received a relatively good financial bill of health in regards to an audit of his 2018 financial statement, Kentucky Auditor of Public Accounts Mike Harmon announced Monday afternoon.
State law requires the auditor to annually audit the accounts of each county sheriff. In compliance with this law, the auditor issues two sheriff’s reports each year: one reporting on the audit of the sheriff’s tax account, and the other reporting on the audit of the fee account used to operate the office.
As part of the audit process, the auditor must comment on noncompliance with laws, regulations, contracts and grants. The auditor must also comment on material weaknesses involving the internal control over financial operations and reporting.
Harrell’s audit contained only one comment, which was that his office lacked adequate segregation of duties, which is a common audit finding for small government offices with few office staff members.
This was a repeat finding and was included in the prior year audit report.
The former sheriff’s bookkeeper collected payments from customers, posted transactions to the receipts ledger, wrote checks, posted checks to the disbursements ledger and prepared monthly and quarterly reports, according to a release by Harmon’s office.
A lack of oversight could result in undetected misappropriation of assets and inaccurate financial report to external agencies, such as the Department for Local Government (DLG).
“Per the former sheriff, the office had a limited number of employees that prevented an adequate segregation of duties over most accounting functions of the office,” the release stated.
The segregation of duties over various accounting functions, such as opening mail, preparing deposits, recording receipts and disbursements, and preparing monthly reports, or the implementation of compensating controls is essential for providing protection from asset misappropriation and inaccurate financial reporting. Additionally, proper segregation of duties protects employees in the normal course of performing their daily responsibilities, according to the release.
Harmon’s office recommended that the sheriff’s office separate the duties involving receiving cash, preparing deposits, writing checks, posting to ledgers, preparing monthly bank reconciliations and comparing financial reports to ledgers.
Harmon noted that if this is not feasible due to a limited budget, cross checking procedures should be implemented and documented by the individuals performing the procedures.
Harrell, who left office at the end of 2018, responded to the audit finding, “Will inform the current sheriff that procedures need to be put in place on segregation of duties of the business office.”
The sheriff’s responsibilities include collecting property taxes, providing law enforcement and performing services for the county fiscal court and courts of justice. The sheriff’s office is funded through statutory commissions and fees collected in conjunction with these duties.