Auditor pushes Owsley officials to collect money owed by county clerk

bestep@herald-leader.comAugust 7, 2012 

State Auditor Adam Edelen


State Auditor Adam Edelen is pushing local officials to try to collect thousands of dollars from Owsley County Clerk Sid Gabbard, whose handling of taxpayer money has been deficient for a decade.

An audit released in June showed Gabbard's office took in at least $59,536 in 2010 that he and employees either didn't put in the bank or didn't record. Much of that money should have been passed on to other local agencies.

Gabbard's office shorted the school system $5,800, for instance, and the fiscal court by more than $5,500, the audit showed. Gabbard also failed to pay money due to the sheriff's office, the county attorney, the health department and other agencies, the audit found.

Gabbard's poor financial practices have deprived agencies of much-needed revenue in a poor county, Edelen said in a sharply worded letter to Owsley County Judge-Executive Ronnie DeBord and County Attorney Henley McIntosh.

Edelen said he was astonished to learn local officials had not made efforts to collect money due from Gabbard's office for years.

"It's unfathomable that the public stewards of one of the poorest counties in the nation could turn a blind eye to the unnecessary costs inflicted on Owsley County taxpayers and the high risk for fraud that exists due to the clerk's refusal to manage the financial activities of his office," Edelen said in the July 25 letter.

McIntosh said he and DeBord are aware of their legal responsibilities. Both said they have talked to Gabbard about resolving the issue of the money he owes.

"I feel confident that what the county is owed, we will collect," McIntosh said Tuesday.

Gabbard did not return a phone call seeking comment.

Edelen pointed out that in addition to Gabbard not turning over money to other agencies, his books were in such disarray that the audit cost the county $43,000 — far more than the average cost of such work.

Had it not been required to cover audit costs, the county could have used that money to hire additional workers, help pay for health insurance coverage for employees or provide other services, Edelen said.

The 2010 audit of Gabbard's office included more than 15 examples of problem financial practices, ranging from failing to give people receipts to not sending in federal and state tax and retirement withholdings from employees' paychecks.

Gabbard withheld money from employees' checks, but didn't send it in, the audit said. He owed $55,000 in withholding to the Internal Revenue Service and other agencies at the end of 2010, the audit said.

It was not the first time auditors had noted numerous accounting improprieties in Gabbard's office. The 2010 audit was the ninth in a row in which auditors found financial controls so poor they couldn't express an opinion on the financial condition of the office.

"He's clearly not meeting his financial obligation to taxpayers," Edelen said of Gabbard.

The office had a known deficit of $61,398 at the end of 2010 — the $59,536 in money collected but not deposited, along with some disallowed expenses

The true deficit could have been higher, but auditors could not determine a total figure.

Edelen's office referred findings from the audit to several other agencies, including the IRS, state tax and retirement authorities, and Attorney General Jack Conway's office.

The audit noted that Gabbard put more than $43,000 into his office account after the end of 2010 — after the books should have been closed.

The audit could not rule out that that money came from 2011 collections, which would mean shorting that year. The 2011 audit has not been completed.

Gabbard said in June that he had paid the withholding money the office owed to federal and state tax and retirement authorities and would fix bookkeeping practices in his office.

Edelen told the judge-executive and county attorney that the county has a legal obligation to collect money due from Gabbard's office.

Edelen said in an interview that he thinks there has been a tolerance for ignoring audit findings among some local officials. It is part of his role as a taxpayer watchdog to make sure the audits are taken seriously, he said.

Bill Estep: (606) 678-4655. Twitter: @billestep1

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