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)
NECESSITY, FUNCTION, AND CONFORMITY: KRS
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.)