YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

January 30, 2001

Report No. 2001-05

IMPORTANT:  The Missouri State Auditor is required by Missouri law to conduct audits only once every four years in counties, like Shannon, which do not have a county auditor.  However, to assist such counties in meeting federal audit requirements, the State Auditor will also perform a financial and compliance audit of various county operating funds every two years.  This voluntary service to Missouri counties can only be provided when state auditing resources are available and does not interfere with the State Auditor’s constitutional responsibility of auditing state government. 

Once every four years, the State Auditor’s statutory audit will cover additional areas of county operations, as well as the elected county officials,  as required by Missouri’s Constitution.  

This audit of Shannon County was a financial and compliance audit of various county operating funds.  The following concerns were noted as part of the audit: 

The audited reconciled cash balances presented in the financial statements do not agree to the cash balances presented on the County Treasurer’s semi-annual settlements or the county’s budget documents, and those records do not even agree with each other.  During our review of these documents, we noted the following concern: 

• The County Clerk and County Treasurer do not reconcile their accounting records.  As a result, errors on the semi-annual settlements prepared by the County Treasurer and errors on actual amounts reported on the budgets prepared by the County Clerk went undetected.

• The total of the ending cash balance for all funds on the semi-annual settlements is not reconciled to the county’s reconciled bank balances.  In addition, interest earned on Special Road and Bridge monies held in certificate of deposits is not properly recorded on the semi-annual settlement.

As of December 31, 1999, the Special Road and Bridge Fund is owed $105,166 and $20,866 by the General Revenue and Assessment Funds, respectively.  As noted in our prior report, during 1997 the county began remitting employee payroll tax withholdings through an automatic withdrawal at the bank.  The payroll taxes for all county employees were deducted from the Special Road and Bridge Fund’s bank account.  This process, which continued until early 1999 when a separate payroll account was opened, resulted in the General Revenue and Assessment Fund liability to the Special Road and Bridge Fund. 

Special Road and Bridge Fund receipts are restricted revenues that are to be used only for expenses directly related to building and maintaining county roads and should not be used to pay payroll taxes of employees who are paid out of other county funds.  This situation appears to have gone uncorrected due to the county’s poor financial condition. 

The county did not publish a financial statement for the year ended December 31, 1999.  This is a significant violation of state law which is intended to inform the public of the county’s financial activity on an annual basis. 

Under state law, the County Commission is responsible for preparing and publishing in a local newspaper a detailed annual financial statement for the county.  The financial statement is required to show receipts, disbursements, and beginning and ending balances for each fund. 

The audit also includes some other matters upon which the county should consider and take appropriate corrective action.