Kentucky Administrative Regulations › Title 200 - FINANCE AND ADMINISTRATION CABINET › Chapter 38 - Office of the Controller › Section 200 KAR 38:070 - Internal controls and pre-audit

Current through Register Vol. 51, No. 1, July 1, 2024
RELATES TO:
				KRS
				42.0201,
				45.121,
				45.240
NECESSITY, FUNCTION, AND CONFORMITY:
				KRS
				45.237 requires the Finance and
				Administration Cabinet to develop, for the executive branch, a system of
				internal controls and pre-audit 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. This
				administrative regulation requires agencies to draft and submit internal
				control plans to the Finance and Administration Cabinet. Agencies will also be
				required to provide information related to internal controls and pre-audit
				procedures as requested by the Office of the Controller, per the delegation
				agreement with each agency. Based on agency internal control plans and
				activities reported, the Finance and Administration Cabinet shall assist
				agencies, when appropriate, in the implementation of policies and procedures to
				reduce improper and unnecessary payments.
Section
			 1. Definitions.
(1) "Agency" is
			 defined by
			 KRS 12.010.
(2) "Agency head" means the cabinet secretary
			 or executive and administrative head of an agency that does not have a
			 secretary at the top of its organizational structure.
(3) "Control environment" means the
			 atmosphere or organizational culture in which state employees conduct
			 activities and carry out their jobs. It encompasses the organizational
			 structure, management philosophy and operating styles, integrity and ethical
			 values, commitment to competence, and human resource policies and
			 practices.
(4) "FAP" means Finance
			 and Administrative Polices incorporated by reference in
			 200 KAR
			 5:021.
(5)
			 "Fiscal officer" means the employee appointed by the agency head, in accordance
			 with FAP 120-07-00, with responsibilities including establishing and
			 maintaining a proper internal control structure, establishing and maintaining
			 the chart of accounts for the state's accounting system, providing assurances
			 that agency financial reports accurately reflect underlying activity,
			 conducting fiscal operations under Generally Accepted Accounting Principles
			 (GAAP), and acting as a single point of contact with the Office of the
			 Controller.
(6) "Internal control"
			 means a procedure or activity implemented to provide reasonable assurance that
			 the agency achieves effectiveness and efficiency of operations, reliability of
			 financial reporting, and compliance with applicable laws, administrative
			 regulations, policies, and procedures.
(7) "Monitor" means quantifiable and
			 qualitative assessment of the effectiveness and efficiency of the system of
			 internal controls and pre-audit policies and procedures.
(8) "Risk assessment" means the
			 identification and analysis of risks to the achievement of operations,
			 financial reporting, and compliance objectives, forming the basis for
			 determining how those risks should be managed.