The Knox County Fiscal Court owes $9,800 in past-due medical bills from jail inmates, has at least $8,500 worth of credit card expenditures for which documentation could not be found, has not properly documented employee vacation time and has given better health insurance benefits to elected officials compared to other county employees.
Those are some of the 19 issues auditors from Simon, Underwood & Associates PSC reported to State Auditor Crit Luallen in their audit of the fiscal court for the 2007-08 fiscal year.
Knox County Judge-executive J.M. Hall said most of the issues were already known to the fiscal court as they were a product of the previous administration. As a result, the fiscal court had notified the state auditor and begun taking steps to resolve the issues.
Auditors found some of the inmate medical bills are at least three years past due.
Knox County Judge-executive J.M. Hall said a closer examination showed that with one exception, those bills were for county employees and either had not been billed properly or were workman’s compensation claims.
"The other bill was for an inmate from another county," Hall said.
Auditors advised that all credit card transactions should be attached to the appropriate statement and a list of transactions from each card should be presented to the fiscal court for approval.
Hall said the issue arose when he attended a judges’ conference and the magistrates attended a magistrates’ conference earlier this year.
"We used the credit cards and they didn’t give us a bill," Hall said. "From now on, we will make sure they give us a bill or send us a bill."
In addition, auditors noted the county administration transferred $188,524 of funds and $636,177 in budget transfers prior to or without the approval of the fiscal court.
Hall said this involved moving money in-house to keep the ambulance service operating. While money moved in the books, no funds changed hands and all of the money is accounted for.
In examining the county’s payroll, auditors noted elected officials are receiving county-paid family insurance coverage while other county employees are paying additional money to be covered under the family plan.
Hall said he did not learn about this until after he took office. In addition, it is set before the election and cannot be changed until the next election.
"It is locked in," Hall said.
Other issues auditors reported included:
¥ The need to improve internal control procedures, specifically the need for independent people to review bank statements and the treasurer’s bank reconciliations. In addition, auditors recommended the county have a person independent of the person who writes checks to match purchase orders to checks and invoices. Finally, the county should have separate individuals responsible for the receipt of cash, the disbursement of cash and the posting of cash to ledgers.
Hall said most of those procedures have already been implemented.
¥ The need to make an effort to collect money paid to former Judge-executive Raymond Smith for $6,118 in excess of his salary, an undisclosed amount of vacation pay, $4,144 for office furniture that was never delivered to the county and $110,000 in government money Smith and his brother obtained for his family. Smith and his family have been ordered to pay restitution on the $110,000, but auditors noted it has not been received.
Hall responded that the matter has been turned over to the proper authorities.
¥ The need to follow property purchase and procurement procedures including keeping copies of the fronts and backs of all checks with the corresponding bank statement, timely issue of disbursements after they have been approved by the fiscal court and purchase orders should include appropriate account numbers, approval from management and specific information including vendor name, product description, quantities and prices.
"Lack of property accounting practices and internal controls increases the risk that misstatements of financial activity and/or fraud will occur and go undetected by the county," auditors stated.
Hall said many of the issues were from the prior administration and efforts have been made to correct them.
¥ The county must improve its records of county employees’ vacation time.
"There are no cumulative records maintained through or outside of the payroll software for all employees eligible for vacation benefits," auditors noted.
We recommend the fiscal court investigate all options available to ensure employees have earned and utilized vacation benefits accurately," they said.
Hall agreed with the auditors.
¥ The county should make an effort to collect $134,090 from M&D Construction for tractor crawler work done at the Tri-County Industrial Park. Auditors noted the amount on the bill was miscalculated.
"We sent a letter to M&D Construction and they said they didn’t feel like they owed it."
¥ Auditors pulled 70 other invoices totaling $2,928,072. Nine of those invoices totaling $203,421 were not paid within 30 days.
Kentucky law requires that invoices more than 30 days past due have 1 percent of the cost added to the bill.
Auditors noted at least five credit card bills had finance charges and at least one had an over the limit fee.
"The payment of finance charges is not a proper expenditure of public funds," auditors stated in the report.