YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

February 8, 2002

Report No. 2002-12

IMPORTANT:� The Missouri State Auditor is required by Missouri law to conduct audits only once every four years in counties, like Stone, 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 Stone County was a financial and compliance audit of various county operating funds.� The following concerns were noted as part of the audit: 

The county's overall planning, monitoring and record keeping procedures for the Black Oak Mountain Resort and Edgewater Village Neighborhood Improvement Districts (NID) were inadequate.� Our review identified: 

�        Several companies receiving payments totaling more than $430,000 from NID funds appear to be related and have the appearance of a conflict of interest.� Further, documentation to support transactions with these related companies was inadequate and questionable. 

�        A total of $445,844 was spent to pave the roads within the Black Oak Mountain Resort NID.� The proposal for this project� totaled only $240,700.� There were no change orders to support the additional amount paid, and the invoices were not sufficient to document what services were provided.� Further, included in the $445,844 was approximately $32,000 for paving of a parking lot on private property.� The County Commission is uncertain if the NID was properly reimbursed the $32,000. 

�        Adequate documentation was not maintained for several expenditures, and duplicate payments appear to have been made on more than one occasion. 

�        The County Commission did not approve or review documentation of expenditures totaling approximately $1,656,500 from the Edgewater Village NID. In addition, the County Commission did not review bids for work performed by a construction company owned by the developer of the Edgewater Village NID. 

The county is ultimately responsible for the repayment of the more than $5 million in the NID limited general obligation bonds.� It is unclear why officials took such a �hands off� approach to these NIDs, as such officials still have a fiduciary responsibility to properly monitor the NID funds. 

The county does not have adequate procedures to ensure budgets are prepared for all county funds.� As a result, disbursements totaling more than $4.3 million and $7.5 million in 2000 and 1999, respectively, were not budgeted.� The lack of budgetary information for the various county funds, especially the NID fund, is a significant omission from the county's financial statements. 

The County Commission responded that they agree that an annual budget should be prepared by it as a governing body of each NID, and will do so.� However, the County Commission provided a similar response to our prior audit, but no budgets were prepared. 

The Stone County Emergency 911 Board did not effectively monitor the general contractor and ensure bids were competitively solicited for the construction of the 911 building costing approximately $400,000.� Additionally, improvement is needed in the 911 Board's expenditure procedures, budgetary procedures, and personnel procedures. 

The audit also includes some matters related to budgets, federal awards, county expenditures, county property, officials' salaries, personnel records, and Health Center Board procedures upon which the county should consider and take appropriate corrective action.

Complete Audit Report