FRANKFORT, Ky. – State Auditor Adam Edelen has released the audit of the financial
statements of the Martin County Fiscal Court for the fiscal year ended June 30, 2013. State law
requires annual audits of county fiscal courts.
Recent changes in auditing standards require the auditor’s letter to communicate whether the
financial statement presents fairly the receipts, disbursements and changes in cash and cash
equivalents of the Martin County Fiscal Court in accordance with generally accepted accounting
principles in the United States. The report found that the financial statement of the Fiscal Court
did not follow this format; however, the Fiscal Court’s financial statement is fairly presented in
conformity with the regulatory basis of accounting, which is an acceptable reporting
methodology. This reporting methodology is followed for 115 of 120 fiscal court audits in
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:
Cash transfers should be approved by the Fiscal Court. The Martin County Fiscal Court
does not approve all cash transfers between funds. When a cash transfer is approved, it is not set
for the actual transfer amount. As stated in the County Budget Preparation and State Local
Finance Officer Policy Manual, all transfers require a court order. We recommend the fiscal
court approve all transfers in the future and provide documentation within the minutes. We
further recommend that the Treasurer seek approval from the Fiscal Court prior to performing
transfers. County Judge/Executive’s response: In the past, the Martin County Fiscal Court approved budgeted cash
transfers with the annual budget; all non budgeted cash transfers were individually approved by Court
order. In the future, the Court will approve all cash transfers, even those that are budgeted.
Martin County Fiscal Court should strengthen internal controls over the financial
reporting of liabilities and debt service. The June 30, 2013 outstanding debt balances reported
on the 4th Quarter Financial Report did not agree to the actual debt balances confirmed with
lenders. Strong internal controls over outstanding debt and liabilities are necessary to ensure
accurate financial reporting. Therefore, we recommend the county strengthen internal controls
over the reporting of debt service payments and outstanding balances. Internal controls such as
comparisons of payment amounts and outstanding balances to amortization and payment
schedules should be made regularly. We also recommend the county consult with its lenders to
verify outstanding debt balances are in agreement. Such practices will strengthen internal
controls over liabilities and debt service and ensure that proper amounts are reported.
County Judge/Executive’s response: In the future, the Court will confirm and reconcile debt balances
with lenders.
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.