Administrative Office of the Courts requests state audit as employee-only surplus sales investigated

06/02/2017 04:36 PM

The Administrative Office of the Courts, subject of an inquiry by Attorney General Andy Beshear into its employee-only surplus sales, has asked state Auditor Mike Harmon to take a closer look at its financial operations.

Harmon has agreed to take on the special examination, which AOC officials hope will improve internal controls at the judicial branch agency.

“I’ve long been a proponent of transparency within the administration of the Judicial Branch,” Kentucky Supreme Court Chief Justice John D. Minton Jr. said in a statement. “Requesting this audit demonstrates our commitment to openness and accountability.”

The AOC has been under investigation by Beshear’s office over surplus property sales that were only available to judicial branch employees, as the Lexington Herald-Leader reported in April. The newspaper found documents showing that AOC employees bought four vehicles in September 2014 at discounts ranging from 70 to 79 percent of their Kelley Blue Book values.

The Herald-Leader’s request for surplus-sale records from the judicial branch, which isn’t subject to the state’s open records law, was denied, but Minton issued a Supreme Court order that made such documents available for public scrutiny.

The April 19 order also stipulates that judicial branch employees can only buy surplus property “if the item is purchased on the same terms that were made available to the general public or the purchase was made at a public auction” and that workers operating the surplus sales “are not permitted to purchase or otherwise receive personal property of the Judicial Branch.”

An unidentified employee has been placed on administrative leave as the investigation continues, according to the Herald-Leader.

Leigh Anne Hiatt, spokeswoman for the AOC, said the agency “has been conducting an internal audit for the past several months.” She said the audit would cover the AOC’s accounting, auditing and other practices.

“Following the information regarding the handling of its surplus sales, the AOC felt it was best to expand the scope of the audit by bringing in an independent third party to evaluate the agency’s internal checks and balances and to determine if there are other areas of our financial operations that need to be improved,” Hiatt said in an email to Spectrum News.

Harmon, who couldn’t predict when the review would conclude since it’s in the initial stages, said his office would look into the AOC’s financial controls in a similar fashion to its special examinations into the University of Louisville Foundation and Department of Criminal Justice Training.

“We’re basically going to go in and take a look at their policies and procedures, look at their structures,” Harmon said in an interview at his Frankfort office. “We will look at their finances, but it won’t be what would be a typical financial statement audit.”

AOC Director Laurie Dudgeon said the agency wants “to ensure we have the right checks and balances in place.”

“We appreciate Auditor Harmon’s assistance with this audit and look forward to working with his office over the next few months,” she said in a statement.

Harmon said he expects full cooperation from the AOC as he office dives into its operations.

“The mere fact that they reached out to us indicated that they realize we need to come in and take a look and see how we can help them improve,” he said. “Obviously they’ve recognized there’s some things they need to change.”


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