(Frankfort - November 2, 2011) State Auditor Crit Luallen today released the audit of the 2010 financial statement of the Harlan County Sheriff, Marvin Lipford. 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.
The audit found that the Sheriff’s financial statement presents fairly the revenues, expenditures, and excess fees of the Harlan County Sheriff in conformity with the regulatory basis of accounting.
As part of the audit process, the Auditor must comment on non-compliance 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 comments:
The Sheriff should not spend fee receipts on disallowed expenditures. Test procedures conducted during the 2010 audit revealed the Sheriff disbursed funds from the official fee account for credit card expenditures without receipts to verify these charges; a credit card expenditure for maintenance of a personal vehicle; and expenditures for lunch and fuel for a trip to the Kentucky Sheriff’s Boys and Girls Ranch.
The following is a detailed listing of those expenditures:
* $312 in expenditures which lacked any supporting documentation
* $649 expended for maintenance on a personal vehicle
* $289 expended on lunches and fuel for the Kentucky Sheriffs’ Boys and Girls Ranch
In Funk v. Milliken, 317 S.W. 2d 499 (Ky. 1958), Kentucky’s highest court ruled that county fee officials’ expenditures of public funds will be allowed only if they are necessary, adequately documented, reasonable in amount, beneficial to the public, and not primarily personal in nature.
The audit recommends the Sheriff avoid expenses that do not meet the Funk v. Milliken test. The audit also recommends the Sheriff reimburse the 2010 official fee account a total of $1,250 for these disallowed expenses. Expenditures made for lunches and fuel for the Kentucky Sheriffs’ Boys and Girls Ranch may be paid out of the drug fund because drug awareness and prevention are taught during the camp. Once the reimbursements are made, the Sheriff should then pay any additional excess fees to the Fiscal Court.
The Harlan County Sheriff, Marvin Lipford, responded, “I will pay the vehicle expenditures out of my pocket, as well as the $312. The other I may pay out of the drug account or out of my pocket.”
The Sheriff’s office lacks adequate segregation of duties. This occurs when only one person has control over various elements of a single account, e.g., deposits and payments. The report recognizes that due to the diversity of operations, small size, and budget restrictions, the Sheriff has limited options for establishing a segregation of duties. However, the audit provides the Sheriff with specific recommendations for improvement of procedures.
The Harlan County Sheriff, Marvin Lipford, responded, “We have and continue to try to improve on 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.