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Susan Montee Yellow Sheet

Report No. 2007-30
August 2007

The following findings were noted as a result of an audit conducted by our office of the Thirty-First Judicial Circuit, City of Springfield Municipal Division.

Receipts totaling at least $1,356,072 were collected by the City of Springfield Municipal Court from July 1, 1997 to June 13, 2006 but were apparently misappropriated.  The court's former Accounting Services Representative hired in June 1991, was responsible for depositing court monies and reporting court receipts to the city's finance department.  She was terminated on July 3, 2006 after being placed on administrative leave on June 14, 2006.  Little or no supervisory review and poorly implemented internal controls allowed the misappropriation to occur and not be detected.  Additionally, several discrepancies that could have been an indication of problems were apparent, but were not adequately followed up on.  Several of our findings are similar to findings in our prior report.

Fines, court costs, and bonds, received by court clerks at five cashier windows, were transmitted daily to the former Accounting Services Representative to count and prepare for deposit.  Some of the receipts apparently transmitted to the former Accounting Services Representative were not deposited into the city's bank accounts and were misappropriated.  The city's finance department began questioning the court in 2003 concerning reconciling items that remained open on the city's bank account reconciliation, and ultimately discovered the misappropriation in June 2006.  There were many indications that court records were poorly maintained, as well as numerous control weaknesses that allowed this misappropriation to occur and not be detected, including:

  • Supervisory oversight and segregation of duties related to the work performed by the former Accounting Services Representative was not adequate.
  • Weaknesses in the court's computer system enabled the former Accounting Services Representative to selectively decide which cashier drawer receipt totals to report to the city.  The misappropriated amounts apparently were not reported to the finance department as received, and neither the city nor the municipal division compared revenues reported to the city to actual municipal court receipt records.
  • Follow up by the city's finance department on irregularities noted with the court's depositing methods dating back to 2004 was not adequate.
  • Investigations by the city's finance department of fluctuations in municipal court credit card adjustments on the bank reconciliation of the city's main account were inadequate. The fluctuations revealed that credit card deposits in the city's account were greater than receipts reported by the court. These credit card receipts were later substituted into deposits and cash was withheld and misappropriated.
  • Neither the city nor court personnel were reconciling the method of payments received to the composition of the total deposit to ensure receipts were deposited intact.  The lack of this comparison allowed checks and credit cards to be substituted into deposits and cash receipts to be misappropriated.
  • Follow up by the city's finance department on irregularities noted on the bank reconciliation for the bond bank account was inadequate.  Additionally, finance department personnel were at one time as much as nine months behind in preparing bond account bank reconciliations.
  • Poor record keeping systems and the lack of controls allowed some payments to be received and not properly recorded and deposited.  Cash and checks totaling over $10,000 were found in court accounting records maintained by the former Accounting Services Representative

Although the city and the municipal division have implemented several procedures to improve weaknesses that allowed the misappropriation to occur, improvement is still needed in several areas. Significant improvement is needed in the court's handling of receipts.  Fines, court costs, and bonds received from the defendant before the related traffic ticket is received from the city prosecutor are held by the court and not deposited into the city's account until the related traffic ticket is received. 

The court's depositing schedule allows a substantial amount of money to be accumulated, and controls over the daily close out procedures for each cashier drawer could be improved.   The court's procedure for reversing payments requires cash to be removed from cashier drawers and makes it difficult to ensure cash has been transmitted properly.

The city's finance department does not have procedures to account for the numerical sequence of court transaction numbers, and some restitution received by the court was deposited into the city's bank account, but not paid to the victim.  Neither the city nor the court has determined amounts owed to external parties resulting from restitution and fee collections that were misappropriated.  Further, bond coverage amounts should be considered along with accounting controls in place.

Bank reconciliations prepared by the city's finance department for the bond account were based on incomplete information and contained numerous adjustments dating back to 2003 and 2004.

The municipal court allows any court clerk responsible for collecting fines and court costs to stamp tickets "nolle pros" and not assess fines and court costs.  Additionally, improvement is needed to account for and process traffic tickets, and the follow up on unpaid parking tickets could be improved.

Responses from the Municipal Judge indicate that steps have been taken to implement many of the recommendations.  The City's Finance Director responded that the court operated independently of the city, and the Court Administrator was responsible for the administrative areas of the court.

Also included in the report are recommendations related to accounts receivable records and computer system access.

 

Complete Audit Report

Missouri State Auditor's Office
moaudit@auditor.mo.gov