{"data":{"id":"us-ky/krs-45.237","jurisdiction":"us-ky","citation":"KRS 45.237","heading":"Definitions for KRS  45.237 to 45.239 -- Establishment of internal","body":"controls and  preaudit procedures  for state agencies -- Collection of\nimproper  payments  -- Referral of certified debts by agency  or local\ngovernment  to Department  of Revenue  -- Information to be provided to\nState Treasurer.\n(1) As used in KRS 45.237 to 45.239:\n(a) \"Agency\" means  an organizational unit or administrative body in the\nexecutive branch of state government as defined in KRS 12.010;\n(b) \"Cabinet\" means the Finance and Administration Cabinet;\n(c) \"Court of Justice\" means  the Administrative Office of the Courts, all\ncourts, and all clerks of the courts;\n(d) \"Debt\" means:\n1. For agencies, a sum certain which has been certified as due and\nowing;\n2. For local governments, a sum certain which has been certified as\ndue and owing, including but not limited to any delinquent taxes or\nfees other than delinquent real and personal property taxes; and\n3. For the Court of Justice, a legal debt, including any fine, fee, court\ncosts, or restitution due the Commonwealth,  which have been\nimposed  by a final sentence of a trial court of the Commonwealth\nand  for which the time permitted for payment pursuant to KRS\n534.020 has expired;\n(e) \"Department\" means the Department of Revenue;\n(f) \"Improper payment\" means  a payment made  to a vendor, provider, or\nrecipient due to error, fraud, or abuse; and\n(g) \"Local government\" means  any city, county, urban-county government,\nconsolidated local government, charter county government, or unified\nlocal government of the Commonwealth.\n(2) The  cabinet shall develop for the executive branch of state government a\nsystem of internal controls and preaudit policies and procedures applicable to\ndisbursement transactions for the purpose of prevention and detection of errors\nor fraud and abuse prior to the issuance of a check or warrant. The initial\npolicies and procedures shall focus first on programs or activities that expend\nthe most federal and general fund dollars. The cabinet shall develop preaudit\nprocedures that meet the unique needs of each agency.\n(3) In establishing these systems of internal control and preaudit policies and\nprocedures, the cabinet shall:\n(a) Consult with each agency within the executive branch to ascertain its\nunique fraud risks;\n(b) Establish policies and procedures for agency-level oversight of fraud\nrisks, including risk assessment, risk tolerance, and management  policies,\nand fraud-prevention processing controls;\n(c) Establish systems and procedures for detecting both unintentional errors\nand  fraudulent misrepresentations that may  have occurred in vendor\ninvoices submitted for payment, applications submitted for benefits,\nclaims for refunds of amounts previously paid or withheld, and other\ndisbursements;\n(d) Establish systems  and  procedures for preventing and  detecting\nunintentional errors and the fraudulent disbursement of funds by state\ngovernment  employees  in the processing, approving, and paying of\ninvoices, refunds, vouchers, benefit payments, and other disbursements;\nand\n(e) Consult with the state Auditor of Public Accounts, the Commonwealth\nOffice of Technology, the American  Institute of Certified Public\nAccountants, the  Association of Certified Fraud  Examiners, law\nenforcement agencies, or any other entity with knowledge and expertise\nin the detection and prevention of fraud.\n(4) Each  agency shall diligently attempt to collect amounts paid to a vendor,\nprovider, or recipient due to error, fraud, or abuse for sixty (60) days after the\nimproper payment  is discovered. If the improper payment  has not been\nrecovered after sixty (60) days, the agency shall certify the improper payment\nas a debt of the agency and shall refer all certified debts to the department.\n(5) A local government may, after making reasonable efforts to collect its debts, by\nordinance, resolution, or otherwise pursuant to law, certify its debts that have\nbeen  due and owing for more than ninety (90) days to the department for\ncollection. The department may, by administrative regulation promulgated in\naccordance with KRS  Chapter 13A, prescribe the form and format of, and the\ninformation required in, referrals by a local government, which may be required\nto be made electronically.\n(6) Any  funds recovered by an agency within the sixty (60) day collection period\nallowed under subsection (4) of this section and prior to referral to the\ndepartment shall be allocated to the fund from which the improper payment\nwas expended.\n(7) Each  agency shall submit annual summaries of debts due to error, fraud, or\nabuse, improper payments discovered, and certified debts referred to the\ndepartment to the Legislative Research Commission. These summaries shall\ninclude but not be limited to:\n(a) Debts owed the Commonwealth  that have been identified by the agency,\nin accordance with the preaudit procedures established under this\nsection, as those resulting from error, fraud, or abuse, of either the payee\nor the state agency;\n(b) The aggregate amount of money collected by the agency on those debts\nduring the sixty (60) day period allowed under subsection (4) of this\nsection; and\n(c) The  aggregate amount of certified debts that the agency referred to the\ndepartment.\n(8) Each  agency shall provide information about each debt due to error, fraud, or\nabuse  that is certified under this section to the State Treasurer for the\nTreasurer's action under KRS 44.030(1).\n(9) Each  local government shall, where feasible, provide information about each\ndebt that is certified pursuant to this section to the State Treasurer for the\nTreasurer's action under KRS 44.030(1).","path":["KRS Chapter 45"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=46766","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:04Z","sha256":"cc257393d0e5cc9f59cf9f63f450cd27086ea4af10f7f7eba4f2d2208c69765e","source_id":"us-ky","stale":false,"prev":"us-ky/krs-45.236","next":"us-ky/krs-45.238"},"notice":"GroundRules: Original legal text. Not legal advice."}