Floyd County moves to resolve $3.4M accounting discrepancy

LOUISVILLE, Ky. (WDRB) — More than a decade ago, Floyd County officials discovered an accounting problem involving millions of taxpayer dollars that couldn't be properly documented.

Now, after years of review, county leaders said they are close to correcting the issue.

"She discovered that we had a $3.4 million undocumented outage that encompassed both the cash book to the banks and the cash book to the county funds," Floyd County Auditor Diana Topping said during a meeting with county commissioners and council members.

Topping said the county's financial records didn't match actual balances held in bank accounts or county funds.

"Our bank account balancing portion of the cash book does not match our actual cash in the banks," Topping said. "And our fund portion of the cash book does not actually match our funds. Both are overstated."

For the past five and a half years, officials in both the auditor's and treasurer's offices have worked to determine what caused the discrepancy, whether money was missing, and who may have made the errors.

County officials now said they identified most of the problems and significantly reduced the discrepancy.

"The total overall amount that will affect the funds is $470,679.22, which is a dramatic drop from $3.4 million," Topping said.

One of the biggest questions surrounding the issue was whether taxpayer money was stolen.

Topping said the money was never stolen, rather misrepresented in the county's cash books and "never existed." Officials believe the issue was caused by years of accounting mistakes.

She described the discrepancy as a combination of many smaller errors spread over time.

"$3.4 million undocumented outage — a lot of small errors, or one giant error or it was a multitude of small," she said. "I think the largest error we found was a $1 million error, but everything after that was anywhere from $20,000 to $300,000."

Indiana counties are required each year to prove to the State Board of Accounts that they can properly manage taxpayer money. State auditors identified the discrepancies years ago and demanded the county correct its books.

If the county failed to resolve the issue, the state warned it would step in directly.

"We were told at the exit interview last year that if we didn’t have it fixed by the end of the audit this year that the state would come down and fix it themselves," Topping said.

Correcting the accounting problems will cost Floyd County approximately $350,000.

County officials are expected to take a final vote in June to resolve and fund the accounting discrepancies.