Auditing standards require the auditor’s letter to communicate whether the sheriff’s settlement presents fairly the taxes charged, credited and paid in accordance with accounting principles generally accepted in the United States of America. The sheriff’s settlement is prepared on the regulatory basis, which is described in the auditor’s opinion letter. Regulatory basis reporting for the sheriff’s settlement is an acceptable reporting methodology, and this reporting methodology is followed for all 120 sheriff settlements in Kentucky.
The sheriff’s financial statement fairly presents the taxes charged, credited and paid for the period April 16, 2019 through May 15, 2020 in conformity with the regulatory basis of accounting.
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.
The audit contains the following comment:
The Adair County Sheriff does not have adequate segregation of duties: This is a repeat finding and was included in the prior year audit report as Finding 2018-001. The Adair County Sheriff’s Office does not have adequate segregation of duties over receipts and disbursements. The bookkeeper collects tax payments from customers, assists in the preparation of deposits, prepares daily collection printouts, and posts to the receipts ledger. In addition, the bookkeeper prepares monthly tax reports, prepares and signs checks, and performs monthly bank reconciliations.
According to the sheriff, a limited budget places restrictions on the number of employees the sheriff can hire. A lack of segregation of duties increases the risk of misappropriation of assets, errors, and inaccurate financial reporting to external agencies such as the taxing districts.
A segregation of duties over collecting taxes, preparing daily deposits, preparing monthly reports, and preparing disbursements or the implementation of compensating controls, when needed because the number of staff is limited, 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.
We recommend the sheriff’s office separate duties over receipts and disbursements. If these duties cannot be separated due to limited staff or limited budget, then strong oversight over those areas should occur and involve the sheriff or an employee not currently performing any of those functions. The individual providing this oversight should initial source documents as evidence of review.
County Sheriff’s Response: The official did not provide a response.
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 audit report can be found on the auditor’s website.
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.
(Michael Goins – State Auditor Mike Harmon’s Office)