YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2004-98

December 29, 2004

During our audit of the Thirty-Ninth Judicial Circuit, City of Kimberling City, Missouri, Municipal Division, we identified the following problems.
 

Receipts of cash totaling at least $32,771 were collected by the city of Kimberling City and the Municipal Division from May 2003 to October 2004 but were not deposited. Checks received for payment of sewer bills, sewer deposits, and other city fees were substituted into deposits of the municipal division and other city bank accounts, and recorded cash receipts were not deposited, and apparently misappropriated. Additionally, some cash received for the payment of sewer bills, sewer deposits, and other city fees was not deposited into the city's bank accounts, and apparently misappropriated.

In most instances credit adjustments rather than payments were posted to the city's sewer accounts receivable records to conceal the shortage. Between May 2003 and October 2004, monthly credit adjustments increased five times more than those recorded in previous months, and totaled approximately $40,913. Considering some of the city's receipt records could not be located and the large amount of credit adjustments posted to city sewer accounts, it appears likely that more monies may have been misappropriated.

Upon discovering several discrepancies in the deposit records of the municipal division, we contacted city officials and interviewed various city employees. The city allowed us access to review city records. Subsequently, on October 20, 2004, the city placed the city's accounting clerk on administrative leave with pay and then terminated the employee on November 1, 2004.

Controls over the recording of various city revenues are poor and have allowed misappropriations to go undetected. There is no oversight or adequate segregation of duties related to the city's accounting system. Adjustments made to customer sewer accounts are not always properly authorized or adequately documented, the method of payment is not reconciled to the composition of deposits, and receipts are not always deposited on a timely basis or in the order received. Our report includes specific recommendations to improve these controls. The city has already taken action to address several of the recommendations.

Also, in the report are recommendations related to court procedures including duties of receiving, recording, transmitting, and disbursing monies collected by the municipal division are not adequately segregated and monthly bank reconciliation procedures are inadequate. Furthermore, receipt slips are not obtained for court monies transmitted to the city's accounting clerk and other improvements are needed with court procedures.
 

Complete Audit Report