State Auditor Mike Harmon has released the audit of the 2016 financial statement of Clinton County Clerk Shelia Booher. State law requires the auditor to conduct annual audits of county clerks and sheriffs.

Auditing standards require the auditor’s letter to communicate whether the financial statement presents fairly the receipts, disbursements and excess fees of the Clinton County Clerk in accordance with accounting principles generally accepted in the United States of America. The clerk’s financial statement did not follow that format. However, the clerk’s financial statement is fairly presented in conformity with the regulatory basis of accounting, which is an acceptable reporting technology. This reporting methodology is followed for all 120 clerk audits in Kentucky.

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 Clinton County Clerk’s Office lacks adequate segregation of duties. This is a repeat finding and was included in the prior year report as finding 2015-001. The county clerk’s office lacks adequate segregation of duties over the accounting and reporting functions of the clerk’s office. The county clerk’s bookkeeper is responsible for receiving cash, preparing daily deposits, preparing and signing checks, posting to receipts and disbursements ledgers, preparing monthly bank reconciliations and also comparing the weekly, monthly, and quarterly reports to the ledgers. This condition is a result of a limited budget, which restricts the number of employees the county clerk can hire or delegate duties to.

A lack of segregation of incompatible duties or strong oversight increases the risk of undetected errors. Proper segregation of duties over the accounting and reporting functions, such as preparation of quarterly reports or implementing compensating controls, when necessary because of a limited number of staff, is essential for providing protection from undetected errors. Additionally, a proper segregation of duties protects employees in the normal courts of performing their daily responsibilities.

We recommend the county clerk separate the duties involved in receiving cash, preparing deposits, writing checks, posting to ledgers, preparing monthly bank reconciliations, and comparing financial reports to ledgers. If this is not feasible due to a limited budget, cross checking procedures could be implemented and documented by the individual performing the procedure.

County Clerk’s response: Don’t have the funds to hire an extra individual.

Auditor’s Reply: Even with limited staff, compensating controls should be implemented in an attempt to offset the lack of segregation of duties, including cross checking by the official if no other staff are available.

The county clerk’s responsibilities include collecting certain taxes, issuing licenses, maintaining county records and providing other services. The clerk’s office is funded through statutory fees collected in conjunction with these duties.

The audit report can be found on the auditor’s website.