State Auditor Mark Harmon has released the audit of the 2022 financial statement of former Caldwell County Clerk Toni Watson that contains one finding.
The report states that auditing standards require the auditor’s letter to communicate whether the financial statement presents fairly the receipts, disbursements, and excess fees of the former Caldwell County Clerk in accordance with accounting principles generally accepted in the United States. The audit says the former clerk’s financial statement did not follow this format. However, it states the former clerk’s financial statement is fairly presented in conformity with the regulatory basis of accounting, which is an acceptable reporting methodology followed for all 120 clerk audits in Kentucky.
According to Harmon’s office, the former Caldwell County Clerk’s fourth-quarter financial statement was not accurately stated. The auditor said this is a repeat finding that was included in the prior year’s audit report. The former Caldwell County Clerk’s fourth quarter financial statement that was submitted to the Department for Local Government reportedly did not include all receipts and disbursements processed by the county clerk’s office during the calendar year. The finding states that total receipts were understated by $58,273 and total disbursements were understated by $56,517.
According to the former county clerk, the fourth quarter financial statement included bank errors and overpayments in order to reconcile to the bank account, and that the delinquent tax sale deposits and refunds were not included due to this activity being processed through the escrow account.
Auditors noted that due to these posting errors, the fourth quarter financial statement was misstated and thus the financial information did not reflect an accurate financial accounting of the county clerk’s office as reported to the Department for Local Government.
Harmon’s office recommended the Caldwell County Clerk’s Office strengthen internal controls to ensure all financial activity processed by the office is reported on the quarterly financial statements to ensure the financial information submitted to the Department of Local Government and other users is accurate and complete.
The former County Clerk responded by stating that she had no recollection of the policy change regarding delinquent tax sales or any discussion with the prior auditor regarding this change. She mentioned that she did not receive any correspondence or verbal information about it at clerk’s meetings. Additionally, she mentioned that the revenue cabinet personnel she spoke to were also unaware of this change. She further stated that used the same escrow account as instructed when the sales started.
The auditor’s response stated the Caldwell County Clerk processed the 2022 delinquent tax sale activity through her escrow account. Delinquent tax sale deposits along with the related refunds are statutorily required receipts and disbursements of a county clerk. The auditor said this activity was not included on the clerk’s receipts or disbursements ledgers as required by the County Budget Preparation and State Local Finance Officer Policy Manual, nor included in the fee account activity as reported on her fourth quarter financial statement.
