State recommends changes in audit

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By Thomas Barr

 SHEPHERDSVILLE – After having a relatively clean audit for the previous fiscal year, Bullitt County officials were not so fortunate for the year ending June 30, 2012.

State auditor Adam Edelen recently released the annual audit for Bullitt County Fiscal Court and several concerns were pointed out.

In each case, local officials pledged to make sure the errors did not occur in the future.

Tichenor & Associates was retained by Edelen’s office to prepare the audit for the 2011-12 fiscal year.

After going through the records, an audit can contain comments on non-compliance issues with the laws, regulations, contracts and any grants.

The following comments and responses were made:

*Fiscal Court should have policies and procedures in place to ensure that all of the county’s capital assets are included and maintained in the capital asset schedules.

In his report, Edelen said that over $1.2 million in new assets were not listed in the county’s paperwork.

The risk, according to the report, is that the county may forget to have insurance on the asset or it is paying insurance for items which it no longer possesses.

The recommendation was to have a policy in place to ensure all county assets are listed. On the list, it should have the asset description; cost and vendor; date placed into service; useful lifespan; and date the asset was retired or the selling price, if applicable.

Edelen recommended the fiscal court review the list at least annually. 

When the audit started and the problem arose, Edelen noted that local officials immediately updated its inventory list and its capital asset schedule.

In her response, County Judge Melanie Roberts said that the asset list is reviewed several times a year and items added and deleted as needed.

Ironically, the large item not included on the asset list was a structure built in 1986 and had never been documented. It is now listed.

*Fiscal court should strengthen controls over the bank reconciliation process.

The report pointed out several instances where variances existed between the auditor’s numbers and those reported by the county.

Things such as checks listed with incorrect check numbers and checks listed as outstanding at the end of the fiscal year were noted.

In order to improve the controls and to improve accountability over the bank reconciliation process, the audit report recommended:

*The county treasurer should prepare accurate bank reconciliations by investigating and resolving all variances in a timely manner.

*The treasurer should make sure the transfers both in and out of funds agree. 

*The county judge/executive or a designee should review all bank reconciliations and give approval by signing and dating all monthly bank reconciliations.

*All adjusting journal entries made to the “adjustment to prior year surplus” should be documented by the treasurer and reviewed by the county judge or her designee.

County treasurer Kenann Sharp said she would follow all the recommendations handed down by the auditor’s office to improve the accountability of bank reconciliations.

*The county’s schedule of leases and liabilities should be accurate and complete.

During its review, auditors found that there were two leases with incorrect outstanding balances listed and one lease was not on the county’s list.

Sharp said the list has been corrected with information supplied by the county judge’s office.

In terms of long-range obligations, the county owes the following:

*Detention Center – built in 2000; county borrowed $9 million; owes $6.145 million in principal and $2.35 in interest as of June 30, 2012, with a payoff in 2028

*Courthouse – borrowed $4 million in 2002; owes $2.45 million in principal and $663,900 in interest and fees as of last June 30; payoff due in 2022

*Judicial Center – refinanced in 2007; outstanding principal balance as of June 30 was $13.79 million plus $5.4 million in interest and fees; state Administrative Office of the Courts pays for the debt payments; final payoff in 2027

*Land – county borrowed $705,000 in 2008 to purchase land. Outstanding principal as of June 30 was $555,000; to be paid off in 2023

*Vehicles – the county borrowed $123,379 in 2012 to purchase five vehicles; principal balance of $114,268 and interest of $11,834 were still due last June; payoff in 2017.