Auditor finds problems with state personnel system, says state Treasurer still has 'deficiencies'

02/14/2012 09:36 AM

The annual audit of Kentucky’s state government on Tuesday revealed glaring weaknesses with the state’s personnel and payroll system and continued problems withe state treasurer’s office, among 62 major findings in the first major audit released by new Auditor Adam Edelen.

The personnel system provided the most fodder for auditors, who found eight “material weaknesses” with a new payroll and benefits system for state workers that was implemented in April 2011.

The audit calls for more training for personnel officials as well as stronger security of the sensitive personal data. It also calls on the Kentucky Personnel Cabinet to tighten its processes to calculate pay and benefits.

The audit made seven recommendations regarding the Kentucky state Treasurer’s office, whose main responsibility is to balance the state’s checkbook.

Auditors again found problems with the agency’s procedures, security and record keeping program — prompting Treasurer Todd Hollenbach to issue terse rebuttals to almost every finding.

In one case, Hollenbach’s office responded that the auditor’s comments were “not accurate,” arguing that its financial system implemented in February 2011 has been able to balance the books.

But auditors say it still has glitches, such as a processing error in June 2011 that the treasurer’s office should have caught.

In another instance, the auditor’s office recommended that the treasurer’s office comply with best practices in the financial industry to protect the security of the state’s system when officials make changes to the electronic program — then document those policies.

Even in print, the treasurer’s response sounded defensive: “We have difficulty in understanding how this rises to the level of being a ‘significant issue.’”

This was a political issue for Hollenbach in his 2011 election run that he narrowly won over Republican K.C. Crosbie. Crosbie repeatedly cited then-Auditor Crit Luallen’s 2011 statewide audit that dinged Hollenbach’s office for still not having the state’s books completely balanced. Hollenbach blamed it on a system implemented by the Finance and Administration Cabinet during the term of former Gov. Ernie Fletcher.

The auditor’s office also found:

  • - The Department of Military Affairs paid $20,760 in late fees on payments.

  • - The Kentucky Horse Park was late in paying 15 invoices that cost it $3,503 in late fees. That, according to auditors, has been an ongoing problem since 2007 for the horse park.


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