Request By:
Mr. Thomas E. Carroll
Wayne County Attorney
Courthouse - N. Main Street
Monticello, Kentucky 42633
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
The county problem relates to excess fees of the Wayne County Clerk for the years 1975 through 1979. The county clerk had employed a certified public accountant to audit the accounts in question. The C.P.A. says that the clerk owes $28,000 in excess fees. A state auditor has audited such records and concludes that the clerk owes the county $52,956 in excess fees. Your question is which audit report should the county accept?
The State Auditor's Office has informed us that the Wayne County Clerk employed a C.P.A. to audit the clerk's accounts for one or more of the years in question. The State Auditor, pursuant to KRS 64.810(3), reviewed the reports of the C.P.A. and discovered certain errors, the major error being that the sales or use tax commissions of the clerk were omitted from the audit. See KRS 138.460(3). Subsequently, the State Auditor's Office conducted an investigative audit of the county clerk's accounts for the years 1975 through 1979. In so doing, the State Auditor determined that the Wayne County Clerk owes Wayne County $52,956 in excess fees, as mentioned earlier herein.
Pursuant to KRS 43.070, the State Auditor is required to annually audit the accounts of the county clerk. However, the statute provides that the State Auditor will not conduct such annual audit where the clerk has previously employed a certified public accountant for that purpose and has notified the State Auditor's office of that employment. In addition, KRS 64.810(1) provides that a county clerk may employ a C.P.A. to audit the clerk's official accounts in lieu of the audit of the State Auditor's, as required by KRS 43.070. The clerk must notify the State Auditor of such employment under certain conditions.
KRS 64.820(1) provides that the fiscal court shall collect any amount due the county from county officials, including the county clerk, as determined by the audit of the official conducted pursuant to KRS 43.070 and 64.810, if the amount can be collected without suit. Under KRS 64.820(2), in the event the fiscal court cannot collect the amount due the county from the county official without suit, the state auditor or the certified public accountant shall report the facts and amount involved to the fiscal court. The fiscal court shall then direct the county attorney to file suit for collection of the amount reported by the auditor or C.P.A. to be due the county within 90 days from the date of receiving the auditor's or C.P.A.'s report.
We note that KRS 43.070, 64.810, and 64.820, in reading them together, contemplate an annual audit of the county officials' accounts. In those statutes it is thus contemplated that an audit be conducted each year, i.e., by the state auditor or by a certified public accountant. See
Economy Optical Co. v. Kentucky Bd. of Optometric Examiners. Kv. . 310 S.W.2d 783 (1958). However. there is nothing in those statutes which precludes the auditing, on the part of the private C.P.A. or the State Auditor, of more than one year (within the statutes of limitation) where accounting errors are discovered, as is the case here, which extend back beyond the last year's audit. See KRS 413.120(1), and
Greenup County v. Millis, Ky., 303 S.W.2d 898 (1957) [application of five-year statute of limitations].
As to your question as to which audit must be observed by the fiscal court for the purpose of collecting the county clerk's excess fees due the county, if the amount can be collected without suit [see KRS 64.820], the practical and logical construction of KRS 64.810(3) and KRS 64.820 clearly means that where the state auditor finds discrepancies in the initial audit of the private C.P.A. and subsequently makes an investigative audit, such state auditor's audit must govern until or unless the controversy is taken to the courts.
The failure to adopt this construction of KRS 64.810(3) would mean that the investigative audit of the state auditor would be virtually valueless, even though there is $25,000 difference between the audit of the state auditor and that of the private C.P.A. Moreover, the adoption of a 3rd party C.P.A would only introduce the endless street of the number of C.P.A.'s necessary to look at the problem where there is a variance in monetary amount of excess fees. To the contrary, this construction means that holding the state auditor's audit to be controlling or binding, short of court action, results practically in a uniform application of statutory law and concomitant accounting procedure, as well as furnishing a stability to the auditing of local officials. The view is anchored in the reasonableness of result. "It has been called a golden rule of statutory interpretation that unreasonableness of the result produced by one among alternative possible interpretations of a statute is reason for rejecting that interpretation in favor of another which would produce a reasonable result." Sands, Sutherland Statutory Construction (4th ed.) Vol. 2A, § 45.12, p. 37. Judge Thomas wrote in
Rouse v. Johnson, 234 Ky. 473, 28 S.W.2d 745 (1930) 750, that ". . . constitutions, and statutes as well, should be given a practical interpretation to the end that the plainly manifested purpose of those who created them might be carried out; . . ."
It is our view that KRS 64.810(3) was intended to establish a hierarchy in connection with audits. And where the state auditor, after finding discrepancies in the initial audit of a private C.P.A., conducts an investigative audit, such audit must be controlling and dispositive, short of court action. Orderly government, in this regard, demands no less.