LEXINGTON, Ky. (LEX NEWS) — An independent audit of Fayette County Public Schools' budget processes and expenditures identified significant weaknesses in financial controls, reporting, oversight, and spending practices, leading auditors to recommend more than 70 corrective actions to improve accountability and transparency.
The final audit report, conducted by Weaver L.L.P., found that the district's FY2025 General Fund reserve ended at roughly 1% of spending, falling below both Kentucky's 2% minimum reserve requirement and the district's own 6% reserve target. Auditors said the findings point to weaknesses that reduce the accuracy, accountability, and transparency of the district's finances.
The report outlines six major areas of concern: documentation and audit trails, policies and internal controls, management oversight, budget monitoring, coding and classification accuracy, and governance and transparency.
Most findings were rated as high risk, the audit reported. Auditors said the issues impacted budget development, expenditure monitoring, travel reimbursements, purchasing card transactions, and grant management.
Among the findings, auditors reported that budget amendment workflows were bypassed between October 2023 and August 2025, allowing users to enter and post budget amendments without required approvals.
The report also found that around 94% of FY2025 budget entries were entered and posted by the same user account, raising concerns about oversight and segregation of duties.
Auditors additionally found inaccurate financial reporting and unsupported entries that contributed to the district's reserve balance dropping to about $6.9 million.
The report cited an unsupported $3.5 million occupational license tax receivable, accounting errors involving approximately $8 million in interdistrict receivables, and an unexplained salary expenditure variance of more than $20 million.
The audit also highlighted concerns involving travel and purchasing-card expenses. Auditors found missing pre-approval documentation in most sampled travel reimbursements, inconsistent supporting records, and multiple instances where board approval could not be verified for travel or purchasing-card expenditures.
To address the findings, Weaver recommended more than 70 actions that were consolidated into 10 priority reforms. Those recommendations include strengthening budget amendment controls, improving segregation of duties within the district's financial systems, establishing formal budget-monitoring procedures, improving board and public reporting, enhancing grant oversight, and updating travel policies.
Auditors proposed an implementation roadmap spanning up to 18 months.
According to school district leadership, the Fayette County Board of Education will now review the final audit findings and work with district staff to address questions raised in the report.
Officials said the board will use the review period to develop a corrective action plan focused on long-term operational improvements.
