Financial Operations and Activities at Three State-Chartered Agencies in Western Kentucky
RCED-83-133, Jun 29, 1983
In response to a congressional request, GAO reviewed the financial activities at three local western Kentucky agencies which receive federal funding for community development programs to determine whether selected financial activities at each of the agencies are adequately controlled and have adequate oversight.
In the Purchase Area Development District (PADD) and the Jackson Purchase Local Officials Organization (JPLOO), GAO found no evidence that they improperly account for receipts and expenditures or that the funds have not been expended for their intended purposes. GAO found that internal controls are in place and that board members are knowledgeable on agency activities. However, in PADD, travel expenses were higher than average and there was no evidence of travel cost control. In response to GAO concerns, this agency agreed to begin documenting travel purposes. In JPLOO, GAO found no evidence of mismanagement of equipment obtained through the federal excess property program. The agency has begun to develop the elements which GAO recommended were needed for public disclosure statements. GAO found the most serious financial management problems in West Kentucky Allied Services, which received about $1.1 million in federal funds in 1981. This agency had no written accounting procedures, and available accounting records were not accurate. More than one-fourth of fiscal year 1981 financial transactions could not be traced, and important records have been lost. Further, agency managers lack control over financial operations because of their limited knowledge of accounting processes. One person controls all of the agency's financial operations, which provides no checks and balances. After GAO pointed out these problems, and a state agency indicated that program funds might be withheld, the agency began corrective action.