YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2006-73

December 2006

The following findings were included in our audit report on the Ozark Fire Protection District.

Board Members of the Ozark Fire Protection District have failed to provide the oversight necessary to ensure district funds are accounted for properly.  The lack of internal control and little or no independent review have resulted in the following:

·        Improper and questionable charges to district credit cards total over $28,000, and approximately $24,000 was electronically disbursed from the district's bank account without authorization to pay for these charges.  Felony stealing charges are currently pending against the district's former Administrative Assistant.

·        An additional $1,630 was electronically disbursed from the district's bank account  and appears to have been used to cover personal debt.

·        Several questionable payroll transactions involving the former Administrative Assistant were identified.  Examples include the number of hours reported on  time sheets did not always agree with the numbers of hours paid, the hourly rate paid did not always agree with the rate approved by the Board, and compensatory and vacation time used is questionable.

·        Checks totaling at least $2,200 were written to cash and endorsed by the former Administrative Assistant without adequate documentation to support the use of these funds.

On two occasions the Board approved wage increases for the former Administrative Assistant without any documented review of her work, and while district by-laws require a biennial audit, Board Members failed to obtain an audit of district funds until 2006.  Inadequate oversight by the Fire Protection District Board has placed district funds at risk.

Documentation used to support fire district expenses relating to grant funds received through the City of Ozark is questionable.  Invoices used as documentation appear to be duplicates of other invoices on file at the district.  An investigation has been performed by the Missouri State Highway Patrol, and information has been turned over to the Christian County Prosecuting Attorney.

The district paid a company owned by a board member $25,254 for labor and materials relating to construction work.  The district did not solicit bids as required by state law, or obtain a written agreement for these services.  Additionally, the board meeting minutes did not specify the work to be performed or indicate an estimate of the total cost of the project.

Monthly financial reports reviewed by the Board were incomplete, and the district's accounting records contained several questionable entries.  Additionally, reconciliations between the accounting records and the bank statements were not performed monthly, as a result, errors and unrecorded transactions were not detected timely.

Significant weaknesses were identified in the accounting controls over district receipts, and as a result, there is no assurance that all cash received by the district was accounted for properly.  Additionally, records documenting the district's petty cash activity prior to May 2005 could not be located, and records maintained after that date were inadequate and incomplete.

District funds were used for several disbursements that do not appear to be necessary.  Examples include the annual awards banquet in 2005, 2004, and 2003 ($9,302), turkeys and hams purchased in 2005 and 2004 ($1,511), and other expenses such as alcoholic beverages, late fees, and donations.  Additionally, the district's bidding procedures could be made more effective by adopting a comprehensive bid policy, and controls are not in place to ensure all district expenses are reviewed and approved, and include adequate supporting documentation.

The district's controls over payroll transactions need improvement.  Payroll duties are not adequately segregated, and time worked is not adequately documented and approved on time sheets.  Further, the district's procedures for reporting compensation to the IRS needs improvement, as numerous differences were identified between accounting records and reports filed with the IRS.

Travel and training policies have not been followed, and documentation to support most training expenses were not maintained.  Additionally, the district's policy does not provide guidelines to determine when lodging costs should be reasonably incurred.

Also included in the report are recommendations related to district policies, budgetary procedures, board meeting minutes, and capital assets.

Complete Audit Report