State Audit Finds "Self-Serving" Culture at KACo FRANKFORT, KY (WEKU) - Extravagant spending has been revealed in a State Auditor's examination of the finances of the Kentucky Association of Counties.

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For five years, beginning in 2003, revenues at the Kentucky Association of Counties rose 75%, boosting the annual budget to almost $6 million. And from 2006 to 2009, more than $3 million in questionable expenditures were made by the KACo board, management and staff.

"On lavish dinners, alcohol, sports and entertainment tickets, staff birthday meals and extravagant Christmas parties," said State Auditor Crit Luallen.

Luallen says the exam also found weak internal controls, minimal ethics policies and no whistleblower policy, but no criminal wrongdoing. The 382-page report includes more than 150 recommendations for improvements, many of which have already been instituted. Former KACo director Bob Arnold resigned last month.

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Luallen says there were even credit card charges for strippers, but the audit found no criminal wrongdoing.

"These charges were all submitted and passed through the process with no attempt to alter or change the appearance of what actually occurred," said Luallen. "I think, there's no question that many of these charges are excessive, they're extravagant, they're outrageous. In some cases, they're distasteful, but apparently not illegal."

Luallen says the KACo board has been cooperative and responsive.

"The KACo board has taken numerous steps recently, as a result of public scrutiny and media reports, to begin to achieve greater accountability," said Luallen. "And in their response to this exam, which is included in the document, the KACo board indicates a commitment toward moving forward with reforms."

Luallen says, while no criminal activities were uncovered, some matters are being referred to the Internal Revenue Service.

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