With the exception of one minor finding, Whitley County Sheriff Colan Harrell recently got a clean financial bill of health on his 2017 fee audit from Kentucky Auditor Mike Harmon.
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.
Harmon’s audit found that the Whitley County Sheriff’s office lacks adequate segregation of duties, which is a common audit finding for agencies with small staffs.
The sheriff’s bookkeeper collects payments from customers, posts transactions to the receipts ledger, writes checks, posts checks to the disbursements ledger, and prepares monthly and quarterly reports, according to a release from Harmon’s office.
This is a repeat finding and was included in the prior year audit report.
“The lack of oversight could result in undetected misappropriation of assets and inaccurate financial reporting to external agencies such as the Department for Local Government,” Harmon wrote in a press release.
The auditor’s office concluded that the sheriff’s office has a limited number of employees that prevents adequate segregation of duties over most accounting functions of the office.
“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,” the release stated.
“We recommend the sheriff separate the duties involved in receiving cash, preparing deposits, writing checks, posting to ledgers, preparing monthly bank reconciliations, and comparing financial reports to ledgers. 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’s response to the audit finding was that his department was “currently taking applications for a part time position on the front line. There is now a second employee that checks the monthly reconciliations and quarterly budget reports after they are prepared. We will continue to implement compensating controls to help offset the lack of segregation of duties.”
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.
The sheriff’s department had $1,712,747 in total receipts for 2017, including: $595,649 from the fiscal court, $354,695 in commission on taxes collected, and $55,289 in fees collected for services, according to the audit.
The sheriff’s department had $1,433,342 in total disbursements for 2017, including $402,079 in deputy salaries, $94,167 in part-time salaries, $120,174 in other salaries, $105,183 in employer paid health insurance and $58,585 in gasoline. The sheriff’s department returned $178,113 in excess fees to the fiscal court, according to the audit.
A complete copy of the audit can be obtained by logging onto the state auditor’s website at www.auditor.ky.gov.