YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

May 24, 2001

Report No. 2001-42

The following finding was noted as a result of an audit conducted by our office of the Office of the State Treasurer.

The State Treasurer’s Office bank reconciliation procedures were not adequate for several accounts during the year ending June 30, 2000.  Research was not conducted and transactions were not cleared for a large number of unreconciled items which were recorded on the bank reconciliations for the Electronic Receipt/Payment account and the Department of Social Services – Division of Family Services accounts during the year ending June 30, 2000.  In addition, bank reconciliations were not prepared for the Department of Social Services - Division of Family Services accounts in a timely manner. 

Prior audit reports for the years ending June 30, 1999 and 1998, noted that the State Treasurer’s Office reconciliations of the Electronic Receipt/Payment Account were not prepared in a timely manner.  To address this issue, the State Treasurer’s Office reallocated duties among staff to allow for more concentrated reconciliation and research efforts on the Electronic Receipt/Payment Account.  As a result of these efforts, the reconciliation processes for this account improved.  However, the conversion of the state’s accounting system from Statewide Accounting for Missouri (SAM) to Statewide Advantage for Missouri (SAM II) on July 1, 1999, significantly affected this reconciliation process.  Many more reconciling items resulted after conversion to the SAM II system than were produced by the SAM system and some reconciling items became more difficult to research.  During our audit, we noted that the balance of reconciling items increased dramatically between June 30, 1998 and June 30, 2000.   

The State Treasurer’s Office also prepares daily account reconciliations for the Department of Social Services – Division of Family Services accounts.  As of January 26, 2001, the State Treasurer’s Office had not performed reconciliations on daily bank statements dated after October 31, 2000.  However, these daily reconciliations were current as of February 28, 2001.   

It is likely that many of the unreconciled items are offset by transactions on the bank statements which have not yet been matched against entries in the state’s accounting system and vice versa; however, the State Treasurer’s Office has no assurance that the bank and book cash balances are accurate unless unreconciled items are properly researched and cleared in a timely manner.  To allow errors and other reconciling items to be identified, researched, and corrected in a timely manner, bank reconciliations should be prepared at regularly scheduled intervals and the reconciliation process should include a thorough review of all reconciling items at the time they are identified. 

The report contains the responses to the finding from the Office of Governor Bob Holden (formerly State Treasurer) and the Office of the State Treasurer Nancy Farmer.

Complete Audit Report