Jane Missouri

YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2004-83

September 30, 2004

IMPORTANT: The Missouri State Auditor is required by state law to conduct audits once every 4 years in counties, like McDonald County, that do not have a county auditor. In addition to a financial and compliance 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.

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

· Cash receipts totaling $16,375 collected by the McDonald County Sheriff's office from January 2003 through March 2004, were not deposited and are missing. Unrecorded checks totaling $12,148 of accountable fees were deposited into the Sheriff's bond bank account. These unrecorded checks were apparently substituted for the missing cash bond receipts. In an effort to further conceal the shortage, $1,000 was transferred to the bond account from the civil fee bank account and $1,600 of cash from the Sheriff's calendar sale proceeds and another $500 unrecorded bond was deposited into the bond account.

In March 2003, our office performed a limited review of the Sheriff's management practices and provided recommendations of how accounting controls and procedures could be improved; however, the Sheriff failed to implement most of those recommendations. The Sheriff indicated that an employee of his office notified him in December 2003 that a $300 cash bond recorded in the jail receipt book was not deposited into the bond account; however, there was no evidence that an investigation into the missing monies was performed by the Sheriff.

These shortages may have been prevented or detected if our recommendations had been implemented or had the Sheriff conducted an investigation of the missing bond or notified our office. These missing funds were not detected on a timely basis due to various internal control weaknesses including little or no review by someone independent of the Sheriff, lax cash receipting procedures, and the lack of appropriate reconciliations. The Sheriff indicated he is cooperating with the Missouri State Highway Patrol investigation.

· The Sheriff apparently claimed and was paid for more miles than he actually incurred in the personal vehicle used to conduct official business. In addition, the validity of civil service payments to the Sheriff and his office employees is questionable, and controls over fuel purchases for county patrol cars need improvement.

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· Controls and procedures over the Sheriff's seized property need improvement. Three ATVs and two dirt bikes seized in October 2000 were not included on the current seized property listing, and as of August 3, 2004, the three ATVs and one of the dirt bikes were being stored at a former deputy's family property.

· Controls and procedures over the Sheriff's inmate and commissary funds need improvement. Duties are not adequately segregated, inmates' monies are not deposited or properly accounted for, and a system for tracking the profit and loss from the sales of commissary items has not been established.

• The county did not prepare budgets for various county funds, which resulted in significant omissions from the county's financial statements. In addition, the county's annual published financial statements did not include the financial activity of several county funds.

• As noted in our prior two reports, the county did not distribute a portion of its General Revenue Fund property tax collections to the Special Road and Bridge Fund as authorized by a ballot issue approved by voters. At December 31, 2003, the General Revenue Fund owed $276,036 to the Special Road and Bridge Fund.

• Officials' salary increases of $27,160 for the year ending December 31, 2004 are not supported by salary commission actions, and the Public Administrator, the County Collector, and the County Assessor salary amounts were questionable.

• Time sheets or other records of actual time worked and leave records of the Sheriff's office employees are not filed with the County Clerk. In addition, an employee of the Sheriff's office was supervised by her spouse, an adequate review of her timesheets was apparently not performed which allowed inaccuracies to go undetected, and as a result, compensatory wages paid to her upon termination totaling $14,000 appear questionable.

• The County Treasurer does not prepare formal bank reconciliations; however, upon our request bank reconciliations were performed at December 31, 2003 and 2002. The reconciled bank balances were $1,519 and $548 less than the total book balances recorded on the Treasurer's semi-annual settlement. In addition, the County Treasurer does not properly reconcile her records with the County Clerk, and the County Commission does not review the Treasurer's semi-annual settlements. Also, county records are not always maintained at the county courthouse.

Also included in the audit were recommendations related to officials' bond coverage, county expenditures and closed meeting minutes, budgetary practices, general fixed assets and health department procedures. The audit also suggested improvements in the procedures of the Prosecuting Attorney, the Circuit Court, the Public Administrator, the Assessor, and the 911 Authority Board.