June 4, 2014 — State Auditor Adam Edelen has concluded a preliminary financial investigation into the City of Olive Hill.
In a letter addressed to Mayor Kenny Fankell and dated June 2, Edelen revealed a “pattern of concerns” dating back to 1998.
The limited audit was conducted, in part, to determine if a more thorough investigation was warranted.
Edelen said the pattern raised questions as to whether the city is effectively addressing weaknesses noted in past audits, conducted in 1998 and 2000.
“Although the APA (Auditor of Public Accounts) takes seriously all allegations... limited resources of this office are not well spent on addressing concerns unless management and the governing body take recommendations seriously and work to meet their own responsibilities of managing city operations in an accountable, compliant, and transparent manner,” Edelen stated in his letter. “I strongly encourage city officials to work to resolve disputes and improve the manner in which city operations are governed.”
Another part of the investigation centered around city utilities. However, Edelen stated in the letter that the APA office will not perform a more detailed, special examination of those concerns.
Future decisions of the court related to pending litigation potentially impact the concerns,” the letter stated. “We are unable to proceed in providing and independent examination of the concerns related to the city utilities, which was the primary subject of our work.”
Field auditors did identify some issues with general governance and operations.
Weakness in providing proper oversight of operations:
From January through March, four City Council meetings were not held due to lack of quorum. Edelen reminded the mayor and Council members that elected officials have a responsibility and obligation to “be present and active in all matters related to their function.”
Disaster Recovery Plan is needed:
A portion of the auditor's preliminary procedures could not be conducted because a damaged computer led to a loss of records. The APA office encouraged the city to create a Disaster Recovery Plan (DRP) that includes backing up electronic system data.