FRANKFORT, Ky. (AP) - An audit has found the Kentucky Workers'
Compensation Funding Commission paid about $510,000 to a private
financial adviser when the law requires it to use state-employed
advisers.

Auditor Crit Luallen told the Lexington Herald-Leader on Friday
the commission has paid Morgan Stanley Smith Barney $40,000 to
$50,000 a year since 1999. State law requires the commission to use
the Kentucky Finance and Administration Cabinet's Office of Fiscal
Management.

Luallen audit found no evidence of conflicts of interest.

The commission, which manages more than $350 million in assets,
has agreed to begin using the Office of Fiscal Management as its
financial adviser.

Board member Jeff McIntosh said he is the person who asked for
the audit. He said he is not satisfied with the board's response
because nobody inside the agency has explained why it ignored the
law.

(Copyright 2011 by The Associated Press. All Rights Reserved.)