YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2006-71

December 2006

IMPORTANT:  The Missouri State Auditor is required by state law to conduct audits once every 4 years in counties, like Miller County, that do not have a county auditor.  In addition to a financial audit of various county operating funds, the State Auditor's statutory audit covers additional areas of county operations, as well as the elected county officials, as required by Missouri's Constitution.

• Actual disbursements exceed budgeted amounts for several funds and material misclassifications of both budgeted and actual amounts were noted.  Various concerns were also noted related to the Health Center Fund budget including failure to report the prior two years’ receipts and disbursements or the beginning cash balance.  In addition, a 2005 Health Center Fund budget amendment was prepared untimely and resulted in a deficit budgeted fund balance.

• The county and health center do not have adequate procedures in place to track federal awards for the preparation of the Schedule of Expenditures of Federal Awards (SEFA), and expenditures were understated by approximately $133,200 and $99,700 for the years ended December 31, 2005 and 2004, respectively. 

• The county has not established cash management procedures to ensure minimal time elapses between its receipt of federal project monies and the distribution of such monies to contractors.  Eight reimbursements totaling $334,685 were received and held for more than 2 business days before the related payment was made to the contractor.

• The county did not have an internal control system in place to adequately monitor the procurement and installation of equipment and services funded through the State Domestic Preparedness Equipment Support Program.  Bid documentation was inadequate or could not be located, payments were not made to the vendor before reimbursement was requested from the state and a final report was not filed.   As a result of the concerns identified, questioned costs of $284,493 have been identified.  In addition, the county has not established procedures to monitor reimbursement requests for a City/County Grant.   

• Significant concerns were noted regarding controls and procedures related to the Sheriff’s petty cash fund and the Sheriff’s Discretionary Fund.    Approximately $2,000 of petty cash monies could not be accounted for.  In addition, the petty cash fund was not maintained on an imprest basis and at times was excessive.  Several documentation concerns were noted including the failure to maintain adequate documentation to support disbursements from the petty cash fund, improper coding on some requests for payment to the petty cash fund, and failure to submit invoices to the county to support amounts requested.  Monies were not always used for the purpose identified on the request form and some items purchased from petty cash should have gone through the county's normal disbursement process.  Finally, loans were made to Sheriff's Office employees from petty cash  and  numerous  disbursements  were   made  from  petty cash   and  the  Sheriff's

Discretionary Fund that appear to be a questionable use of public funds.  The Sheriff indicated the petty cash fund was discontinued on May 9, 2006.

• Controls and procedures related to the Sheriff’s inmate bank account are not adequate.  Accounting duties are not adequately segregated, prenumbered receipt slips are not issued, deposits are not reconciled to monies collected, receipts are not always deposited timely, and checks and money orders are not restrictively endorsed immediately upon receipt.  Checks have been outstanding for a considerable time, liabilities are not reconciled to cash balances, interest income is not turned over to the county, and monies have not been paid to released inmates timely.

• Numerous control weaknesses were noted related to the Sheriff’s general account which is used to process various fees, jail board bills, and bond monies.  Cash custody and record keeping are not adequately segregated. Accountable fees of approximately $1,050 were not remitted to the County Treasurer, but were instead used to pay towing bills, vehicle inspections, and to replace bond monies that were unaccounted for.  Proceeds from two grants totaling $2,040 were deposited to the Sheriff’s general account and used to pay deputies for overtime hours rather than processing the payments through the county payroll system.  A fee is not charged to cover the county’s cost of processing concealed weapon permit applications.  Reimbursements from the state for extradition costs contracted out to a private vendor were not submitted on a timely basis resulting in lost revenue to the county of at least $19,938 for costs incurred in 2003.  Follow-up procedures for past due prisoner billings are not adequate and procedures are not performed to monitor and follow-up on unpaid balances for serving papers.  Controls over seized property need improvement.  Supporting documentation for the Miller County Law Enforcement Association bank account is not maintained and cash was still on hand in July 2006 for a fund raising account closed in February 2006. 

• The financial condition of the Jail Fund and the Special Road and Bridge Fund has declined which could have an effect on the General Revenue Fund.  There has been a substantial decrease in receipts from boarding of prisoners for other entities and the county has made significant transfers from the Capital Improvement Tax Fund and the General Revenue Fund to the Jail Fund.  Most disbursement categories of the Special Road and Bridge fund reflected significant increases from 2004 to 2005 while most receipt categories remained relatively stable.  It is essential that the county commission continue to monitor the activity of the Jail Fund and the Special Road and Bridge Fund both in the immediate and long-term future.

• Salary commission meeting minutes were not maintained for the 2005 meeting and salary increases approved for some officials did not appear to comply with state law.

• Some time sheets were not turned in to the County Commission in a timely manner and some procedures performed by the county do not comply with personnel policies.

• Property tax system procedures and controls are not sufficient.  Annual settlements of the current and former County Collector were not always filed timely and were not accurate.  The County Clerk does not maintain an account book with the County Collector and there was no evidence to indicate procedures are performed by the County Clerk or the County Commission to verify the County Collector’s monthly or annual settlements, including additions, abatements, and delinquent taxes.  Concerns were also noted related to a new property tax system implemented in March 2005. 

The report also includes comments related to various county procedures, county property records, monitoring of vehicle/equipment usage and operating costs, and County Collector’s, County Treasurer’s, Assessor’s and Health Center’s accounting controls and procedures.

Complete Audit Report