Bluegrass Beacon: State auditor is shining light of truth on clouded financial data

Audits of public tax dollars are a very different matter.

These inspections allow citizens to hold their political representatives accountable for the way they consume hard-earned resources generated by society’s private, productive sectors. Without such audits encouraging government transparency, the political class would be able to run roughshod over the rest of us.

Unfortunately, such audits don’t appear to be enough as we still have local county officials thumbing their collective noses at the whole accountability process.

For example, despite findings by the state auditor’s office that Owsley County Clerk Sid Gabbard’s office has failed to account for more than $60,000 in cash, to remit monies owed to schools, the health department and the library and to send payments withheld from local workers to retirement funds, neither the local fiscal court nor the county attorney have taken effective action to recoup the funds.

For 10 consecutive years, Gabbard has received “disclaimed” opinions from the state auditor about his office’s practices.

A “disclaimed” opinion means an office’s bookkeeping practices are such a mess that the validity of its financial statements cannot even be verified. Apparently, Gabbard hopes that by making it impossible to verify his office’s spending practices, he will escape accountability.

Whether that happens remains to be seen.

State Auditor Adam Edelen has turned over this information to federal and state authorities, but that’s not all he’s done. By making information about what is occurring in a locally elected office transparent, the auditor also has given voters and taxpayers the information they need to hold their officials accountable.

Even where there isn’t evidence of blatant wrongdoing, audits play an important role in waving red flags that warn of sloppiness within agencies handling taxpayer dollars – carelessness that could easily lead to mismanagement, fraud and even theft.

For example, while Edelen’s recent review of University of Louisville Hospital funds officially “found no evidence that taxpayer dollars were abused,” the audit did indicate poor oversight of the Quality Care and Charity Trust (QCCT) – U of L’s $32 million project to provide care for indigent patients.

Edelen’s audit calls attention to the hospital’s failure to verify incomes and determine whether patients actually are qualified. Instead, the hospital’s “process gives the appearance that QCCT funds were used to cover bad debt” incurred by the hospital.

Before Edelen commenced his third-party audit of U of L Hospital, Dr. David Dunn, U of L’s executive vice president for health affairs, assured us all that U of L’s own internal audits of the QCCT confirmed that “the funding for this important program is in fact utilized to provide the best health care to the underserved in our community and State.”

Just imagine if those unfortunate taxpayers targeted by the IRS were able to escape the tax collectors’ clutches by presenting their own internal audit confirming all appropriate taxes had been taken.

An external audit spun, shall we say, a more complete tale than what Dr. Dunn would have us to believe:

• QCCT board members had not met for four years prior to the audit.
• Such a board structure is not conducive for proper oversight of the QCCT.
• The board did not review or approve annual funding calculation.
• QCCT funds are not accounted for at the patient level.

An independent audit can wave the red flag. The question for locally elected officials – and their taxpaying constituents: What are they going to do about it?

Jim Waters is acting president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.freedomkentucky.org/bluegrassbeacon.