YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

September 25, 2002

Report No. 2002-94

IMPORTANT:  The Missouri State Auditor is required by Missouri law to conduct audits only once every four years in counties, like Adair, which do not have a county auditor.  However, to assist such counties in meeting federal audit requirements, the State Auditor will also provide a financial and compliance audit of various county operating funds every two years.  This voluntary service to Missouri counties can only be provided when state auditing resources are available and it does not interfere with the State Auditor's constitutional responsibility of auditing state government.

Once every four years, the State Auditor's statutory audit will cover additional areas of county operations, as well as the elected county officials, as required by Missouri's Constitution.

This audit of Adair County included additional areas of county operations, as well as the elected county officials.  The following concerns were noted as part of the audit:

• Formal budgets were not prepared for various county funds during the two years ended December 31, 2001.  Expenditures totaling in excess of $4 million were incurred for these funds during the audit period.  In addition, actual expenditures exceeded budgeted expenditures of various funds by approximately $340,000 and $65,000 during the years ended December 31, 2001 and 2000, respectively. 
  
  
• The county does not have adequate procedures in place to track federal awards for preparation of the schedule of expenditures of federal awards (SEFA).  The county's SEFA during the audit period did not include expenditures related to the majority of its federal grant programs.  Additionally, the county has not established cash management procedures to ensure the minimum time elapses between its receipt of federal project monies and the distribution of such monies to contractors.
  
  
• Although the General Revenue Fund cash balance at December 31, 2001, had increased approximately $322,000 since December 31, 1999, the county estimates it will deplete approximately $214,000 of the cash balance during the year ended December 31, 2002, with increased obligations which are likely to be reccurring. The county should continue to review discretionary expenditures and efficiently use resources available to the county.
  
  
• Salaries for most elected county officials increased significantly in January 1998.  By using the salary schedules from the 1998 statutes (those changed by Senate Bill No. 11, effective August 28, 1997), mid-term raises were in effect granted to county elected officials. The raises ranged from $5,500 to $12,000. Some offices began a new term in 1999 and the salary increase for those officials is in question for only one year.

On May 15, 2001, the Missouri Supreme Court handed down an opinion that holds that all raises given pursuant to this statute section are unconstitutional.  Based on the Supreme Court decision, the raises given to the Associate County Commissioners, totaling approximately $21,180 for the three years ended December 31, 2000, should be repaid and raises given to other officials within their term of office should be re-evaluated for propriety.

• Billing statements were not always reconciled to invoices prior to payment.  The county made duplicate payments on several invoices totaling approximately $39,800 during the year ended December 31, 2001.  In addition, numerous checks, totaling approximately $77,600, were voided prior to issuance because the checks were made payable to the wrong vendor or for the wrong amount, or because the county had a credit balance with the vendor.
  
  
• Effective January 2001, the County Commission adopted a self-funded health insurance plan for county employees.  A formal cost/benefit analysis was not performed comparing the benefits and costs of a self-funded insurance plan compared to a conventional plan, the Self-Funded Insurance Fund was not sufficiently funded, the plan was renewed for a second year without soliciting bids for other coverage, and the amount budgeted for claims during 2002 did not consider the potential liability increase to the county.  The County Commission indicated they are currently pursuing other avenues of providing health insurance.
  
  
• The Recorder of Deeds distributed approximately $18,600 in excess fees to the County Treasurer during the four years ended December 31, 2001, resulting in a shortage in the official bank account.  In addition, interest and copy monies of approximately $1,400 and $7,200, respectively, were not distributed to the General Revenue Fund during the four years ended December 31, 2001.  This situation occurred and went unnoticed by the Recorder of Deeds because of weaknesses in accounting controls and procedures.

·        For some cases in which the Prosecuting Attorney enters into plea bargains, he requires the defendant to make a "donation" as a condition of the plea bargain.  The Prosecuting Attorney does not make the Associate Circuit Judge aware of the "donation" when presenting the plea bargain to the court.  The Judge indicated she would have to remove herself from the case if she became aware that a "donation" was a stipulation of the plea bargain.  Given this, the Prosecuting Attorney and Associate Circuit Judge should reevaluate whether requiring donations as part of a plea bargain is acceptable.  Other concerns were noted with the distribution of the "donations", the manner in which the amounts of the donations are determined, and the donation records maintained.  In addition, internal controls in the Prosecuting Attorney's office are lacking for various monies collected by his office.

Other areas where concerns were noted included budgetary practices, general fixed asset records and procedures, employee time sheets and leave records, controls over property tax books, Sheriff's office records and procedures, and health center procedures.

Complete Audit Report