Review of Undistributable Child Support Collections in Kentucky From October 1, 1998, Through December 31, 2005

During our review period, the Kentucky Division of Child Support (the State agency) did not recognize any undistributable child support collections, nor did it report any of them as program income . As of December 2005, the State agency had not recognized or reported program income totaling $2,681,571 ($1,769,837 Federal share) for undistributable child support collections and interest income earned from uncashed State Department of Treasury (Treasury) checks. We recommended that the State agency (1) ensure that undistributable collections totaling $2,040,753 ($1,346,897 Federal share) are transferred to the State's general fund or Treasury and reported as program income, (2) recognize and report program income totaling $640,818 ($422,940 Federal share) for interest earned from uncashed Treasury checks, (3) implement policies and procedures to ensure that uncashed checks and undistributed collections are transferred to Treasury and reported as program income, (4) implement policies and procedures to recognize and report as program income the interest earned from uncashed Treasury checks, and (5) recognize and report program income for collections that became eligible for forfeiture or abandonment and interest earned from uncashed Treasury checks subsequent to our audit period.  The State agency concurred with our findings.