YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2000-41
June 5, 2000

The following problems were discovered as a result of a special review conducted by our office of the City of Bellflower, Missouri in response to the request of the Governor.

From January 1998 through February 2000, more than $11,000 was misappropriated from the city. Some water, sewer and trash receipts, water meter and sewer deposits, and various miscellaneous receipts which had been turned over to the city treasurer, were not deposited in the bank accounts. Amounts shown on the monthly financial reports reflected more receipts than were deposited, and a larger cash balance than was in the bank account. In addition, various bank records and copies of deposit slips were missing. This helped to conceal the cash shortage.

Nancy Fischer, who served as city treasurer since January 1998, resigned in February 2000.

The city clerk collects most city receipts, except for court monies, and transmits them to the city treasurer. A receipt slip is prepared by the city clerk and signed by the city treasurer which documents the amount of cash and checks turned over and the type of collections (utility payments, property taxes, water meter and sewer deposits, etc). The city treasurer then prepares a deposit slip and deposits the monies into the various bank accounts.

From January 1, 1998, through February 29, 2000, receipt slips showed monies totaling $11,187 were turned over to the city treasurer, but were not deposited.

The former city treasurer has found and/or repaid $1,142 of these undeposited monies to the Missouri State Highway Patrol during the course of its investigation. These monies are currently held by the Missouri State Highway Patrol. In addition, the city found a money order for $147 at city hall which has subsequently been deposited. As a result, a net amount of $9,898 is still missing.

Monthly financial reports prepared by the treasurer reflected more receipts than were deposited and a larger cash balance than was in the bank account. In addition, various bank records and copies of deposit slips are missing. This helped to conceal the cash shortage.

The shortage was undetected for a length of time due to several internal controls weaknesses, including inadequate segregation of duties and lack of independent review, as discussed later in this report.

Information gathered during our review has been turned over to the Missouri State Highway Patrol.

Accounting duties were not adequately segregated. The city treasurer made deposits, prepared and signed the checks, reconciled the bank statements and prepared the monthly reports. There was no reconciliation between the monies turned over to the treasurer and the amounts deposited, or warrants approved by the board and the actual payments. In addition, there was not an independent review of the bank reconciliations, or monthly financial reports.

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