YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

January 15, 2004

Report No. 2004-03

IMPORTANT:� The Missouri State Auditor is required by Missouri law to conduct audits only once every four years in counties, like Howard, 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 Howard County included additional areas of county operations, as well as the elected county officials.� Many of the current recommendations are similar to prior recommendations that were not implemented by county officials.� The following concerns were noted as part of the audit:

�        The county's General Revenue Fund and Keller Building Fund are in weak financial condition.  The General Revenue Fund cash balance decreased from $388,688 at January 1, 2001 to $82,129 at December 31, 2002.� �Significant factors causing the decline of this fund's financial condition include the addition of a courthouse elevator and salary increases for elected officials.� At December 31, 2002, the Keller Building Fund cash balance was $6,998, which includes $5,713 of rental deposits held for building tenants.� At times during the audit period, the county relied on the rental deposit monies to pay building operating costs.

�        As noted in prior reports, the county does not have adequate procedures in place to accumulate federal financial assistance information and the schedule of expenditures of federal awards was not complete and accurate.

�        As noted in prior reports, the County Clerk does not maintain centralized compensatory time records, and the county's established personnel and payroll policies are not consistently applied and enforced.

�        Computer system controls and procedures need improvement.� Some passwords are not changed periodically to ensure confidentiality, backup disks are not stored at an off-site location, and the county has no formal emergency contingency plan in place.

�        As noted in prior reports, controls over the preparation of and changes to the property tax books are not adequate.� The County Clerk does not prepare or verify the tax books, additions and abatements are not properly reviewed, and the County Clerk does not maintain an account book with the County Collector.

�        The county has not taken action on mid-term salary increases given to associate commissioners 1999.  On May 15, 2001 the Missouri Supreme Court handed down an opinion that challenged the validity of Section 50.333.13, RSMo, which allowed county salary commissions in 1997 to provide mid-term salary increases for associate county commissioners.  In a written legal opinion issued in August 2001, the county Prosecuting Attorney concluded the mid-term raises were not valid.� However, as of August 2003, the county has taken no action to seek repayments.

�        The Sheriff did not adequately review and supervise the work of the bookkeeper.� In addition, there were several problems with the receipting and depositing procedures, the fee account was overdrawn, checkbook balances were not maintained, and bank reconciliations and open items listings were not prepared.� Also, calendar advertising commissions checks were cashed and used to purchase equipment and supplies rather than being deposited into the bank account, and invoices were not retained to document amounts paid.

�        Sheltered Services Board members do not adequately review invoices and compliance with contract terms prior to signing checks.� As a result, a $1,700 overpayment was made to a contractor which billed the board for more hours than authorized by the contract and expenses not authorized in the contract.� The board treasurer discussed this situation with the contractor and the board has received reimbursement for the overpayment.

�        In November 2002 and December 2001, the 911 board made lump sum year-end salary adjustment payments to its employees totaling $4,200 and $4,400, respectively.� These payments appear to represent additional compensation in the form of a bonus for services previously rendered and, as such are in violation of the Missouri Constitution and contrary to Attorney General opinion.

Also included in the audit are recommendations related to county's budget preparation, employee bonds, record retention, and vehicle records.� The audit also suggested improvements in accounting procedures and controls of the County Clerk, Circuit Clerk and Ex Officio Recorder of Deeds, Prosecuting Attorney, health department, Sheltered Services Board, and 911 Board,

Complete Audit Report