AOC Response to Audit by KY Auditor of Public Accounts

Operational arm of Judicial Branch is making changes to strengthen internal processes

In May 2017, the Administrative Office of the Courts asked Kentucky Auditor of Public Accounts Mike Harmon to conduct the first audit in the history of the Kentucky Judicial Branch. The audit began in June 2017 and the results were announced in July 2018.

The AOC’s response to the audit’s findings and recommendations can be found here.

Scope of Audit

The AOC was initially prompted to invite the APA to examine its financial operations and internal management controls by the desire to improve policies regarding the disposal of surplus property. The scope of the audit ultimately covered several areas for Fiscal Years 2016 and 2017, including:

  • Determine whether policies and internal controls governing financial activity of the then-Department of Administrative Services, including travel reimbursement policies for elected officials and non-elected personnel, are adequate, provide the appropriate level of access and authority, are consistently followed and provide for a transparent process.
  • Determine whether policies and procedures governing the Budget and Accounting & Purchasing offices are adequate, consistently followed and provide for timely reporting.
  • Determine whether an independent process to receive, analyze, investigate and resolve concerns relating to potential waste, fraud and abuse exists for the AOC and Kentucky Court of Justice employees and is adequate to ensure concerns are properly addressed.

“When the AOC requested this audit, it was an unprecedented step that reversed more than 40 years of tradition in how the court system has handled external review,” Chief Justice of Kentucky John D. Minton Jr. said. “While we are careful to safeguard the Judicial Branch as a separate and co-equal branch of government, we also want to advance our efforts to be transparent and accountable to Kentucky taxpayers. There is value in obtaining regular audits of the AOC and making those results public, and the Supreme Court will determine the scope and frequency of audits going forward.”

Steps Taken to Tighten Controls Prior to Final Audit Report
In an effort to improve its policies and processes, the AOC had already addressed many of the audit’s findings and recommendations, including:

  • Developed inventory control processes.
  • Implemented waste, fraud and abuse reporting mechanisms.
  • Trained managers and staff on purchasing and procurement practices.
  • Revised operational procedures regarding reimbursements to county governments for the operation and maintenance of court facilities.
  • Consulted a tax attorney to provide advice on proposed revisions to travel reimbursement policies being developed by the AOC for recommendation to the Supreme Court.
  • Implemented a weekly process to deactivate user accounts for separated/transferred employees.
  • Restructured the Department of Administrative Services. During the period covered by the audit, the Division of Auditing Services, the Division of Facilities and the Division of Logistics were all located in the Department of Administrative Services under the supervision of a former executive officer. That department has been abolished and the divisions now report to separate managers, who in turn report directly to the AOC deputy director.
  • Arranged for Auditor of Public Accounts to conduct a one-day training for AOC managers and staff on internal controls to prevent waste, fraud and abuse.

Prior to the release of the audit report, the Supreme Court had also taken significant steps to tighten controls:

  • Adopted an Open Records Policy for the AOC.
  • Adopted an order governing the handling of the Judicial Branch’s surplus property.
  • Adopted Section 2.02 Reporting Waste, Fraud, and Abuse for the Kentucky Court of Justice Personnel Policies.
  • Adopted the Kentucky Court of Justice Language Access Plan and Procedures.

Steps Taken Since Audit Release to Implement Audit Recommendations
The AOC submitted its response to the audit’s findings in July 2018 and has turned its focus to carrying out the audit’s recommendations. The AOC’s Audit Implementation Response Team has begun implementing changes, including:

  • Issued a request for project services for a consultant to assist with the AOC’s audit implementation.
  • Adopted Procedures for the Creation & Revision of Standard Operating Procedures, Standards, Departmental Policies, and Departmental Guidelines.
  • Adopted new sanitization and electronic data disposal procedures.

The Supreme Court has also implemented changes since the release of the audit report, including:

  • Adopted revised Kentucky Court of Justice Travel Regulations effective Sept. 1, 2018. Chief Justice Minton notified all justices, judges, circuit court clerks and court personnel about the changes on Aug. 30, 2018.

This page will be updated regularly to reflect the AOC’s progress.