YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

September 26, 2003

Report No. 2003-96

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

• The county does not have adequate procedures to ensure budgets are prepared for all county funds.  This resulted in receipts of approximately $835,000 and $858,000 and disbursements of approximately $1 million and $2.9 million not being budgeted for 2002 and 2001, respectively.  These amounts are primarily the result of the lack of budgetary information for the Neighborhood Improvement District funds.  In addition, the county�s annual published financial statements did not include the financial activity of several county funds.
   
• The County Commission does not adequately plan or monitor the activity of the Neighborhood Improvement Districts (NIDs).  In addition, special assessment collections for the Black Oak and Edgewater Village NIDs have not been adequate to meet the debt service requirements and NID funds held by the trustee bank were not adequately monitored by the County Treasurer. 

The special assessment collections for the Black Oak NID were not sufficient to make the September 1, 2002 bond payment of $70,222, causing the county to be in default.  The County Commission was subsequently able to collect adequate delinquent assessments to make the bond payment and the default was rescinded.  However, in 2003, the county contributed $93,465 and $60,843 from the county's general revenue fund for the Black Oak and Edgewater NID debt service payments, respectively, to prevent default. 

NID funds of $9,629 were deposited into the wrong account by the Trustee Bank and not detected the County Treasurer.  In addition, several transactions were not correctly reflected in the NID records. 

The County Commission has not prepared a formal plan to effectively monitor and evaluate the amount of Black Oak and Edgewater special assessment funds collected or how future bond payments will be funded.   

• The county does not have specific procedures in place to track federal assistance for preparation of the Schedule of Federal Awards (SEFA).  The county�s SEFA schedules contained numerous errors and omissions including reporting only 8 of 17 and 9 of 20 federal programs during 2002 and 2001, respectively.
   
• Time sheets were not maintained by some employees, and other employee's compensation was not processed through the normal payroll system and not properly reported on the employee's W-2 form.
   
• The County Collector�s annual settlements for the years ended February 28, 2003 and 2002 contained errors in amounts reported, resulting in differences in total collections and distributions.  In addition, formal bank reconciliations are not prepared and there are small unidentified balances in an old bank account.  
   
• The Prosecuting Attorney�s office needs to improve its procedures related to performing bank reconciliations, segregating accounting duties, preparing open items listings, and disbursing old outstanding checks. 

The audit also included some matters relating to road and bridge procedures and general fixed asset records.  The audit also suggested improvements in controls and procedures of the Assessor, Sheriff, and Health Center. 

Complete Audit Report