YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

September 29, 2003

Report No. 2003-98

IMPORTANT:  The Missouri State Auditor is required by Missouri law to conduct audits only once every four years in counties, like Phelps, 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 Phelps 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 Commission has not annually set the E911 tax rate as required by state law. The maximum authorized rate has been levied since the E911 tax was established by the county voters.  The balance of the E911 Fund has increased from $369,246 at January 1, 2000, to $1,043,752 at December 31, 2002.  The County Commission should annually review the E911 tax rate and set it to provide sufficient operating funds but not create an excessive fund balance.  If the county plans to accumulate a balance for future capital improvements, specific plans should be documented in the county budgets.  The County Commission provided various explanations and indicated that in future budget messages reasons for the balance will be clearly defined.
   
• The county makes numerous interfund transfers, many of which do not appear necessary.  Many of the transfers represent reimbursement of expenses incurred in one fund that could have been incurred in another fund.  It appears the county could incur many of these expenses directly from the appropriate fund, which would reduce the amount of required interfund transfers.  In addition, the county maintains separate funds from which interfund loans are made for cash flow purposes, and it appears the county could combine certain funds to eliminate the need for interfund loans.  The County Commission indicated progress has been made in these areas but believes some transfers are necessary and the separate funds have been effective management tools.

• Mid-term salary increases totaling approximately $12,000, given to each of the two associate county commissioners in 1999 and 2000, were ruled unconstitutional by the Missouri Supreme Court.  While the Prosecuting Attorney advised the County Commission to seek repayment of these increases the county has not sought repayment.  In addition, contrary to the advice of the Prosecuting Attorney, the county Salary Commission met in 2002 and authorized a salary increase of $8,599 annually for the County Treasurer beginning in 2003.  Because state law appears to authorize salary commissions to only meet in odd-numbered years, it is unclear whether the salary increase provided to the County Treasurer is in accordance with state law.
   
• Concerns noted in our prior audit related to the procedures and controls over seized property were not addressed timely.  As a result, problems with the Sheriff's seized property and evidence room resulted in internal and external investigations and the demoting of the property custodian.  In 2002, at the direction of the circuit court, an investigation was made into the status of about 730 cases involving seized weapons and drugs, and for most of these cases, the Sheriff's department could not locate the property or documentation of the property's disposal.  The Sheriff conducted an internal investigation in March 2003 which concluded that the property custodian had failed to obtain the proper authorization from the Prosecuting Attorney prior to disposing of the property.  The Sheriff adopted new policies and procedures in March 2003, and investigations regarding this matter continue.  In addition, the Sheriff maintains a bank account for seized monies which totaled $86,000 at December 31, 2002, but has not prepared listings of open items to reconcile the balance of this account to the related liabilities.

Also included in the audit are recommendations to improve controls over the Prosecuting Attorney's receipts and the County Collector's commissions and liabilities.

Complete Audit Report