45.237 Definitions for KRS 45.237 to 45.239 -- Establishment of internal controls and preaudit procedures for state agencies -- Collection of improper payments -- Certified debts referred to Departmen

Loading PDF...

Page 1 of 2 45.237 Definitions for KRS 45.237 to 45.239 -- Establishment of internal controls and preaudit procedures for state agencies -- Collection of improper payments -- Certified debts referred to Department of Revenue. (1) As used in KRS 45.237 to 45.239: (a) "Agency" means an organizational unit or administrative body in the executive branch of state government as defined in KRS 12.010; (b) "Department" means the Department of Revenue; (c) "Court of Justice" means the Administrative Office of the Courts, all courts, and all clerks of the courts; (d) "Improper payment" means a payment made to a vendor, provider, or recipient due to error, fraud, or abuse; and (e) "Debt" means: 1. A sum certain which has been certified by an agency as due and owing; and 2. For the Court of Justice, "debt" means a legal debt, including any fine, fee, court costs, or restitution due the Commonwealth, which have been imposed by a final sentence of a trial court of the Commonwealth and for which the time permitted for payment pursuant to the provisions of KRS 23A.205(3) or 24A.175(4) has expired. (2) The Finance and Administration Cabinet shall develop for the executive branch of state government a system of internal controls and preaudit policies and procedures applicable to disbursement transactions for the purpose of prevention and detection of errors or fraud and abuse prior to the issuance of a check or warrant. The initial policies and procedures shall be established and implemented no later than October 1, 2004, and shall focus first on programs or activities that expend the most federal and general fund dollars. The Finance and Administration Cabinet shall develop preaudit procedures that meet the unique needs of each agency. (3) In establishing these systems of internal control and preaudit policies and procedures, the Finance and Administration Cabinet shall: (a) Consult with each agency within the executive branch to ascertain its unique fraud risks; (b) Establish policies and procedures for agency-level oversight of fraud risks, including risk assessment, risk tolerance, and management policies, and fraud- prevention processing controls; (c) Establish systems and procedures for detecting both unintentional errors and fraudulent misrepresentations that may have occurred in vendor invoices submitted for payment, applications submitted for benefits, claims for refunds of amounts previously paid or withheld, and other disbursements; (d) Establish systems and procedures for preventing and detecting unintentional errors and the fraudulent disbursement of funds by state government employees in the processing, approving, and paying of invoices, refunds, vouchers, benefit payments, and other disbursements; and Page 2 of 2 (e) Consult with the state Auditor of Public Accounts, the Commonwealth Office of Technology, the American Institute of Certified Public Accountants, the Association of Certified Fraud Examiners, law enforcement agencies, or any other entity with knowledge and expertise in the detection and prevention of fraud. (4) Each agency shall diligently attempt to collect amounts paid to a vendor, provider, or recipient due to error, fraud, or abuse for sixty (60) days after the improper payment is discovered. If the improper payment has not been recovered after sixty (60) days, the agency shall certify the improper payment as a debt of the agency and shall refer all certified debts to the department. (5) Any funds recovered by an agency within the sixty (60) day collection period allowed under subsection (4) of this section and prior to referral to the department shall be allocated to the fund from which the improper payment was expended. (6) Each agency shall submit annual summaries of debts due to error, fraud, or abuse, improper payments discovered, and certified debts referred to the department to the Legislative Research Commission. These summaries shall include but not be limited to: (a) Debts owed the Commonwealth that have been identified by the agency, in accordance with the preaudit procedures established under this section, as those resulting from error, fraud, or abuse, of either the payee or the state agency; (b) The aggregate amount of money collected by the agency on those debts during the sixty (60) day period allowed under subsection (4) of this section; and (c) The aggregate amount of certified debts that the agency referred to the department. (7) Each agency shall provide information about each debt due to error, fraud, or abuse that is certified under this section to the State Treasurer for the Treasurer's action under KRS 44.030(1). Effective: June 20, 2005 History: Amended 2005 Ky. Acts ch. 85, sec. 61, effective June 20, 2005. -- Created 2004 Ky. Acts ch. 192, sec. 1, effective April 21, 2004.