401 Kar 42:335. Financial Audits

Link to law: http://www.lrc.ky.gov/kar/401/042/335.htm
Published: 2015

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      401 KAR 42:335. Financial audits.


      RELATES TO: KRS 61.878(1)(c),

224.60-130(1)(d), (j), (k), 224.60-140(2)(a), (e)

      STATUTORY AUTHORITY: KRS 224.60-130(1)(k)


224.60-130(1)(k) requires the establishment of the policy, guidelines, and

procedures to perform a financial audit of an owner or operator receiving

reimbursement for corrective action services from the Petroleum Storage Tank

Environmental Assurance Fund (PSTEAF), or of an entity who contracts or subcontracts

for corrective action services at a facility whose owner or operator is

eligible for reimbursement from the PSTEAF. This administrative regulation

establishes procedures for audits and the penalties for noncompliance.


      Section 1. Applicability. An entity shall

be subject to financial audit if it is an entity described in KRS



      Section 2. Financial Audit Policy and

Procedure. (1) The cabinet shall audit an entity if:

      (a) A document it is required

to submit to the cabinet appears to be fraudulent; or

      (b) There is evidence or

other reason to believe that the entity has violated a federal or state law or

regulation related to its actions.

      (2) Upon written request by

the cabinet, records, as described in KRS 224.60-130(l)(k), shall be provided

to the cabinet during a financial audit.

      (3)(a) The cabinet shall notify the

subject of the audit, in writing, of the date that the audit is scheduled to

begin. The notice shall be sent at least ten (10) working days before the

scheduled start of the audit.

      (b) A decision to reschedule the audit

shall rest solely with the cabinet, and it shall not be rescheduled more than

thirty (30) days after the date of the original audit.

      (4)(a) If the owner or operator fails to

maintain records as required by KRS 224.60-130(1)(k), the cabinet shall recover

money reimbursed to the owner or operator for the cost of corrective action at

the facility to which the missing documents relate.

      (b) If an eligible contractor or

subcontractor fails to maintain records as required by KRS 224.60-130(1)(k),

the cabinet shall recover any monies paid to the entity pursuant to a contract

or agreement to perform a corrective action service at that facility.


      Section 3. Improper Use of Reimbursements.

(1) If the audit by the cabinet finds an improper, irregular, or illegal use of

money received directly or indirectly from the cabinet, or that the money was

obtained by fraud or misrepresentation, the cabinet shall report the results of

the audit to the proper authorities for civil and criminal investigation.

      (3)(a) Failure by an owner or operator to

cooperate with an audit shall render the petroleum storage tank owner or

operator ineligible for reimbursement. Reimbursements to the owner or operator

shall be subject to recovery by the cabinet.

      (b) Failure by an entity, who contracts

or subcontracts for corrective action services at a facility, to cooperate with

an audit shall result in the revocation of eligibility. Reimbursements to that

entity, pursuant to a contract for a corrective action service, shall be subject

to recovery by the cabinet.


      Section 4. Extensions. (1) The owner or

operator of a UST system may request an extension to a deadline established by

this administrative regulation or established by the cabinet in writing pursuant

to this administrative regulation.

      (2) The extension request shall be

submitted in writing and received by the Underground Storage Tank Branch of the

Division of Waste Management prior to the deadline.

      (3) The cabinet shall grant an extension,

if the cabinet determines that an extension would not have a detrimental impact

on human health or the environment. (25 Ky.R. 1274; Am. 2870; eff. 6-9-1999;

Recodified from 415 KAR 1:135; 32 Ky.R. 2143; 33 Ky.R. 759; eff. 9-13-2006; 37

Ky.R. 2738; 38 Ky.R. 549; eff. 10-6-11.)