Ky. audit faults oversight of federal chem grants

FRANKFORT, Ky. (AP) - For a second year, Kentucky Auditor Crit
Luallen has zeroed in expenditures that she deemed questionable in
federal grant funds meant to help a rural county prepare for
chemical emergencies.
Luallen's report on Tuesday - which assessed how well Kentucky
is monitoring federal money flowing into the state - questioned
nearly $30,000 in federal Chemical Stockpile Emergency Preparedness
Program grant funds reimbursed to Laurel County in southeastern
Those expenditures were for equipment insurance and generator
The findings follow last year's report in which auditors said
they uncovered improprieties in the purchase of equipment from a
nearly $1.9 million grant.
Last year's findings were turned over to the state attorney
general's office, the FBI and the U.S. Department of Homeland
Security, the auditor's office said.
The auditor's office said in a news release that a criminal
investigation is ongoing.
A spokeswoman for Attorney General Jack Conway said the case was
initially referred to the attorney general and to federal
investigators. She said the attorney general is no longer involved
in the matter. David Beyer, an FBI spokesman in Louisville, said he
could neither confirm nor deny whether the FBI is investigating the
Monica French, a spokeswoman for the state Division of Emergency
Management, said that to her knowledge the case is still under
"We're fully cooperating however we can," she said.
CSEPP is a federal program that provides funding to help a
10-county region of Kentucky prepare for any chemical emergencies
that might arise from Blue Grass Army Depot at Richmond. The depot
has a stockpile of chemical weapons.
Auditors noted other reimbursement requests from Laurel County
that were outside the 2009 fiscal review. Those requests included a
$10,987 reimbursement that included a receipt for home furnishings,
and a $2,709 reimbursement that included a $546 receipt for a
compact disc player and satellite radio receiver, and a $345
receipt for window tinting for three cars.
Notice of those expenditures will be sent to federal officials,
the auditor's office said.
Laurel County Judge-Executive Lawrence Kuhl said he had not yet
seen the audit report and declined comment on it.
The latest audit said the lack of internal controls in reviewing
reimbursement requests has "opened the door for questionable
expenditures." It faulted the state Division of Emergency
Management for not requiring documentation such as invoices or
canceled checks.
The report urged the agency to re-evaluate its approval process
and require proof of payment for every request. It said the agency
should seek reimbursement from the Laurel County Fiscal Court for
any fraudulent transaction.
In its response, included in the report, the state agency agreed
with the auditor's findings. The agency said its CSEPP program
manager will conduct an internal review in Laurel County and will
work with a new agency monitoring team to review policies and
The audit covered the fiscal year that ended last June 30.
Luallen said Kentucky used $9 billion in federal grants during that
"With the increase in the amount of federal funding coming to
the state through stimulus grants, it's more important than ever
that strong controls are in place by state government to properly
monitor these funds," Luallen said in a statement.

(Copyright 2010 by The Associated Press. All Rights Reserved.)

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