The Reporter covers Miller, Morgan and Camden County in Central Missouri's Lake of the Ozarks and is published once per week on Wednesdays.

Published September 4, 2019

County audit continues recommendations

(Editor’s Note: This is part 2 covering the state audit of Camden County)
 

CLICK ON THE LINK BELOW TO DOWNLOAD THE FULL COPY OF THE AUDIT REPORT FROM THE MISSOURI STATE AUDITOR'S WEBSITE

https://app.auditor.mo.gov/AuditReports/CitzSummary.aspx?id=742

CAMDEN COUNTY – As with all departments in the county, the State Auditor also found problems in the Sheriff’s Department and the Prosecutor’s Office.

The audit only covers the 2017 year.

Money received and disbursed was the focus of criticism Missouri State Auditor Nicole Galloway had for the Sheriff’s Department.

Receipts and deposits
“Procedures for receipting, recording, depositing, and reconciling payments need improvement.

• Sheriff's office staff issue generic unnumbered bond forms and do not issue receipt slips for bonds received. As a result, neither the Sheriff's Administrative Assistant nor the Sheriff can account for all bonds received and ensure bond monies are handled properly. The Sheriff's office collected approximately $702,400 in cash bonds during the year ended December 31, 2017.
• Sheriff's office staff do not issue receipt slips for garnishment fees and receipt slips are not always issued for civil fees… The Sheriff's Administrative Assistant stated office personnel only issue receipt slips for check payments if the payor requests a receipt.
• The Sheriff's Administrative Assistant does not account for the numerical sequence of receipt slips or CCW permit numbers. As a result, there is no assurance all monies received are deposited and the composition of receipts is not reconciled to the composition of deposits.
• Monies received from the sale of deputies' firearms that are being replaced are not receipted or transmitted timely. For example, $1,500 (cash) received from the sale of firearms in December 2017, was originally transmitted to the County Treasurer on December 19, 2017; however the Sheriff's office requested the money back that same day and did not transmit it again until January 3, 2018.

Liabilities
“The Detention Administrative Assistant does not prepare a monthly list of liabilities for the inmate account and consequently, liabilities are not agreed to the reconciled bank balance.

“Monthly lists of liabilities should be prepared and reconciled to the available cash balance to ensure sufficient cash is available for the payments of amounts due and all monies in the bank can be identified.”

The auditor had several recommendations for the Sheriff’s Department (Sheriff’s answers are in italics).

1. Issue prenumbered receipt slips for all monies received, account for the numerical sequence of receipt slips, and reconcile the composition of receipts to the composition of deposits and transmittals. The Sheriff should also transmit monies timely and intact.

“The Corrections Supervisor is having staff complete sequentially numbered cash receipt slips for bond receipts. One copy will accompany the bond sheet, one copy is for the inmate, and one copy stays in book. This is a temporary process until we figure out and obtain sequentially numbered bond forms.

“We began issuing receipt slips for all civil fee and garnishment fee transactions at the auditor’s request in early 2018. The Administrative Assistant will be reviewing and initialing all receipts to match up civil paperwork.

“We began issuing sequentially numbered receipt slips for CCW permits at the auditor’s request in early 2018.

“We will account for the numerical sequence of receipt slips, compare the composition of receipt slips to the composition of deposits and transmittals, and transmit monies timely and intact.”

2. Prepare monthly lists of liabilities and reconcile the list to the reconciled bank balance monthly. Any differences should be promptly investigated and resolved. Any unidentified monies should be disposed of in accordance with state law.

“I have had an electronic report of liabilities made that will be run and used when doing the bank reconciliations every month. We will also investigate and resolve any differences monthly. Any unidentified monies will be disposed of per state law.”

3. Establish procedures to routinely investigate outstanding checks. Old outstanding checks should be voided and reissued to payees that can be readily located. If payees cannot be located, the monies should be disposed of in accordance with state law.

“I have established procedures to periodically follow up on outstanding checks. We are reissuing checks to payees that can be located. For payees that cannot be located, the monies are turned over to the state's unclaimed property fund. Over $600 in outstanding check money was sent off last year to the Missouri State Treasurer's office. We are currently waiting on certified letters to come back and will be sending off the rest of the unclaimed money that is still in former inmate accounts. Once the letters are returned, that money will go to the Missouri State Treasurer's office.”

4. Refund all inmate monies to inmates upon release. In addition, the Sheriff should attempt to resolve unclaimed balances of inactive inmate accounts. If the payee cannot be located, the amount should be disbursed in accordance with state law.

“We are currently refunding monies to inmates upon their release. As discussed in our response to 5.3, we are working to resolve unclaimed balances in former inmate accounts and sending all unclaimed funds to the state.”

5. Maintain accurate inventory records of e-cigarettes, reconcile these records to e-cigarettes purchased and sold, and perform periodic physical inventory counts.

“We are making a report that will tell how many e-cigarettes are sold each month. Corrections officers are now keeping track of how many e-cigarettes are ordered and on hand versus how many are sold to verify inventory, including damaged inventory.”

6. Contact the DOR for guidance on establishing procedures for charging and collecting sales taxes on e-cigarette sales and ensure all future sales tax collections are remitted to the DOR.

“We are currently working with the County Clerk's office to (1) set up an account with the DOR to pay the sales tax on e-cigarette sales, (2) determine what account that these fees will go through in the County Clerk's office, and (3) send in quarterly payments.”

The state auditor also targeted the Prosecuting attorney’s office regarding their handling of income generated from bad checks and other “fees”.

According to the audit report, the prosecutor’s office collected bad check restitution and fees, court-ordered restitution and fees, and delinquent tax fees totaling approximately $209,200 during the year ending December 31, 2017.

Bank reconciliations and liabilities

“The Prosecuting Attorney’s clerk did not prepare adequate bank reconciliations. In addition, a monthly list of liabilities is not prepared to reconcile to the account balance. The clerk's reconciliation process includes documenting the transactions that have cleared the bank; however, a report of outstanding checks, deposits in transit, and other reconciling items is not prepared or reviewed. As of December 31, 2017, the bank balance was $26,489, which is less than the total outstanding checks of $26,946 documented in the Prosecuting Attorney's records. Thus, the account is showing a shortage of $457.”

Deposits
“Receipts are not always deposited timely and prior to disbursement. Monies received from November 9 to November 14, 2017, totaling $6,771, were not deposited until November 22, 2017, and monies received from December 6 to December 8, 2017, totaling $516, were not deposited until December 18, 2017. In addition, monies are sometimes disbursed prior to deposit of the corresponding receipts. For example, the Prosecuting Attorney issued checks totaling $6,461 to victims on November 16, 2017, and $516 on December 8, 2017. The deposits of the corresponding receipts were not made until November 22, 2017, and December 18, 2017. Old outstanding checks prevented the bank account from being overdrawn.”

Outstanding checks
“The Prosecuting Attorney has not established procedures to routinely follow up on outstanding checks for the restitution account. As of December 31, 2017, 168 checks totaling $16,583 had been outstanding for over a year, with some checks dating back to 2003.”

The auditor had only three recommendations for the Prosecuting attorney (Prosecutor’s answers are in italics).

1. Ensure adequate monthly bank reconciliations are prepared that include lists of outstanding checks, deposits in transit, and other reconciling items. In addition, prepare a list of liabilities and reconcile it to the available cash balance. Any differences between accounting records and reconciliations should be promptly investigated and resolved.

“Additional procedures have been implemented in reconciling the bank statements. The account shortage has been corrected and brought current. Old checks that were not cashed were either submitted to the state treasury as unclaimed property or the payee was contacted and a new check issued. The monthly reconciliation is performed on the bank form as suggested. The Quicken accounting program has been added to account for all deposits and checks issued. This is an extra step to assure accuracy. A second reconciliation is performed using the Quicken program.”

2. Ensure all monies are deposited timely and prior to related disbursements.

“Deposits are taken to the bank a minimum of twice a week. Checks are not mailed out until deposit has been made.”

3. Establish procedures to routinely investigate outstanding checks. Old outstanding checks should be voided and reissued to payees that can be readily located. If payees cannot be located, the monies should be disposed of in accordance with state law.

“Payees are contacted for current checks that are not being cashed in a timely manner. A new check is issued if it has been lost or if check is older than 2 months. A stop payment is placed on the old check with the bank. If a check is returned because of a bad address, it is researched to locate the possible most current address.”

In the Wastewater Department, the finger of blame was once again pointed at the County Commission, along with the Wastewater Supervisor.

Segregation of Duties
“The County Commission and Wastewater Supervisor have not adequately segregated accounting duties and do not perform documented supervisory reviews of detailed accounting and transmittal records. The Clerical Staff/Field Inspector/Nuisance Officer, the department's only clerical employee, receives, records, and transmits monies to the County Treasurer.”

Receipting, recording, and transmitting

• The wastewater department does not issue receipt slips for all monies received, account for the numerical sequence of receipt slips, or restrictively endorse checks and money orders upon receipt. During a January 25, 2018, cash count we identified 10 checks, totaling $1,350, for permit application fees that were not receipted or restrictively endorsed. Department clerical staff indicated they only issue receipt slips for cash payments and upon customer request. The restrictive endorsement is applied by the County Treasurer following transmittal.
• Monies are not transmitted timely and intact. Department personnel indicated they hold receipts and do not transmit them to the County Treasurer for deposit until the related permit applications are approved. Our review of receipt and transmittal records for permit applications approved and permits issued in February 2017 identified a $150 check received for permit application number 6145 on December 19, 2016, had not been transmitted to the County Treasurer for deposit until after our inquiry in March 2018. This check was located in a folder along with the application. We also noted $150 in cash received on February 21, 2017, for permit number 6147 approved February 23, 2017, was not transmitted to the County Treasurer until March 9, 2017, while a $150 check received on February 24, 2017, for permit number 6149 approved February 28, 2017, was included in the March 3, 2017, transmittal.

Despite this, the auditor had only two recommendations for the Wastewater department (answers are in italics).

The County Commission work with the Wastewater Supervisor to:
1. Segregate accounting duties or ensure documented supervisory reviews of detailed accounting and transmittal records are performed.

“Duties have now been segregated so that all transactions are performed by one individual and a documented review is done by a second individual.”

2. Ensure prenumbered receipt slips are issued for all monies received, restrictively endorse checks and money orders upon receipt, and ensure receipts are transmitted intact and timely. In addition, the numerical sequence of receipt slips should be accounted for and the composition of receipts should be reconciled to the composition of transmittals.

“All monies are now receipted into a 3-part prenumbered receipt book. A copy is issued to the customer, one kept in the application file, and one is kept with the transmittal. We now have a ‘For Deposit Only’ stamp and all checks and money orders are stamped when received. All money is forwarded to the County Treasurer’s office on a weekly basis, Fridays. Refunds must be requested through the purchase order process. It is then taken from the revenue line it was originally deposited into. We will also account for the numerical sequence of receipt slips issued and reconcile the composition of receipt to the composition of transmittals.”

In the Public Administrator’s office, only two relatively minor problems were found: The Public Administrator does not always file annual settlements timely and the Public Administrator staff do not prepare bank reconciliations timely.

That left only two recommendations for the Public Administrator (answers in italics).

1. Ensure annual settlements are filed timely.

“My office will work with the Probate Clerk and Judge to file our settlements in a more timely manner.”

2. Perform bank reconciliations monthly. Any differences between accounting records and reconciliations should be promptly investigated and resolved.

“My office has changed our procedure of processing and reconciling our monthly bank statements to ensure they are done in a timely order.”

In the County Clerk’s office, the Auditor again found only two problems and that was in reference to segregation of duties and receipting and transmitting.

Segregation of duties
“The County Clerk has not adequately segregated accounting duties and does not perform a documented supervisory review of detailed accounting records and transmittals. The Chief Deputy receives, records, and transmits monies for sunshine law and voter list requests, and two other deputies receive, record, and transmit monies for liquor and auctioneer licenses and notary and map fees. The County Clerk reviews and signs the main transmittal report for notaries, auctioneer, and map fees; however, he does not review detailed accounting records to ensure monies received for sunshine law and voter list requests and liquor licenses are properly recorded and transmitted to the County Treasurer.”

Receipting and transmitting
• Receipt slips are not issued for all monies collected and a comprehensive log of receipts is not maintained. The County Clerk issues receipt slips for notary and map fees, and records receipts for sunshine law and voter list requests and auctioneer and liquor licenses on printed forms that are not numbered.
• The method of payment (cash or check) is not always indicated or accurately recorded on receipt records. During our January 25, 2018, cash count we noted 2 receipt slips totaling $6 did not indicate the method of payment and 2 checks totaling $53 were improperly recorded as cash.
• The County Clerk does not transmit all fees timely and intact to the County Treasurer. Liquor license receipts collected from September 20 to October 18, 2017, totaling $270 ($260 cash and $10 check), were still on hand at the time of our cash count on January 25, 2018. These fees were transmitted to the County Treasurer on January 30, 2018.

The left only two recommendations for the county clerk (answers in italics).

1. Segregate accounting duties or ensure adequate independent or supervisory reviews of detailed accounting and transmittal records are performed and documented.

“Concerning liquor license receiving, a detailed spreadsheet has always been maintained. However, at the recommendation of the auditors, the receipt number has been added to the spreadsheet; and the County Clerk compares receipts to transmittals before approving for release to the County Treasurer.”

2. Issue prenumbered receipt slips for all monies received, indicate the method of payment on all receipt slips, and transmit receipts intact and timely. In addition, the numerical sequence of receipt slips should be accounted for and the composition of receipts should be reconciled to the composition of amounts transmitted.

“At the recommendation of the auditors, new numbered receipt books (3 copy) are now being used to record all payments made and the method of payment, business name, and liquor license number is noted on each receipt slip. The clerk taking the payment signs the receipt slip and the County Clerk signs the license. The customer is given the white copy with their license. All payment information is added to the spreadsheet daily. At the end of each week, all checks and cash totals are matched to the spreadsheet and the yellow copy of the receipt slips are attached. The County Clerk signs and dates his verification of the spreadsheet which goes to the County Auditor and a copy goes to the County Treasurer with the money. A copy of the spreadsheet is kept with the pink copies of the receipts. New policies have been put into place to assure timely transmittal of funds.”

In the County Recorder’s Office, segregation of duties, bank reconciliations and deposits were the only problems discovered.

Segregation of duties
“The Recorder of Deeds has not adequately segregated accounting duties and does not perform a documented supervisory review of detailed accounting and bank records. The Chief Deputy is primarily responsible for receiving, recording, and depositing monies. The Recorder of Deeds does not review accounting records to ensure monies received are properly recorded and deposited.”

Bank reconciliations
“The Recorder of Deeds did not prepare adequate bank reconciliations for January through November 2017. The reconciliation process included documenting the deposit and disbursement transactions for the month and ensuring the total deposits equaled the total disbursements. However, lists of outstanding checks, deposits in transit, or other reconciling items were not prepared or reviewed.”

Deposits
“The Recorder of Deeds does not make deposits timely. For example, monies totaling $19,177 receipted from December 1 through 13, 2017, were deposited on December 14, 2017. In addition, monies totaling $10,408 receipted from December 14 to December 20, 2017, were deposited on December 21, 2017.”

This left recommendations for the three problems (Recorder’s answers are in italics).

1. Segregate accounting duties or ensure adequate independent or supervisory reviews of detailed accounting and bank records are performed and documented.

“Effective June 18, 2019, I implemented written policies and procedures to segregate receipting and depositing duties. Also, there will be at least one additional employee performing documented reviews of detailed accounting and bank records.”

2. Ensure adequate monthly bank reconciliations are prepared that include lists of outstanding checks, deposits in transit, and other reconciling items. Any differences between accounting records and reconciliations should be promptly investigated and resolved.

“During 2018, my office began using an accounting software program to prepare and generate monthly bank reconciliations which include lists of outstanding checks, deposits in transit, and other reconciling items. Any differences identified are promptly investigated and resolved. Effective June 18, 2019, I implemented written policies and procedures to ensure monthly bank reconciliations are reviewed by at least one additional employee and delivered to the County Auditor for review.”

3. Ensure monies received are deposited timely.

“Effective June 18, 2019, I implemented written policies and procedures to ensure each day’s receipts are deposited the next business day.”

The state auditor has no authority to force anyone they audit to change whatever problems are discovered during the audit process.

Entities audited can completely ignore the auditor’s recommendations if they want to.

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