US - An independent auditor's report has criticized the behaviour of two senior officers at Kentucky Retirement Systems (KRS)
In its report, the audit said during the fiscal year ended 30 June 2006, the chief investment officer of KRS and the chief operations officer at KRS, circumvented internal control policies and procedures related to an alternative investment made by the KRS Insurance Fund.
This alternative investment is thought to refer to a real estate deal in February 2006, in which the US$15.1m fund reportedly purchased a property for nearly twice what it had sold for, only a few months before.
The audit also accused the CIO and chief operations officer of failing to perform adequate due diligence in violation of agency practice and industry best practice, related to an alternative investment made by the KRS Insurance Fund.
Among the responses, the auditor said KRS has retained fiduciary counsel, Ice Miller LLP, to review the internal controls in place and will issue an opinion regarding the internal controls and make recommendations, if necessary.
It added that that it was the opinion of the executive management of KRS and internal audit that the internal controls were adequate.
Responding to the report, William Hanes, executive director of KRS, said while it was critical of the officers' behaviour it made no findings regarding the retirement systems or the internal controls.
He said: "Further, there has been no such finding by the system's internal auditor or contracted independent auditor. The findings do criticize actions of two former officers that were involved with the real estate transaction."
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