YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2005-24

March 2005

During our audit of the Forty-fifth Judicial Circuit, City of Troy, Missouri,  Municipal Division, we identified the following problems.

Receipts of cash totaling at least $50,950 were collected by the city of Troy Municipal Division from June 2002 to September 2004, but were not deposited in the municipal division bank account.  The majority of the undeposited monies appeared to relate to bond payments. 

On August 29, 2004, the day before our audit of the municipal division was scheduled to begin, a fire occurred in the basement of city hall.  It has been determined that the fire, which destroyed some municipal division financial records, was deliberately set.  Many municipal division records were severely damaged by the fire for the entire audit period. In addition, division personnel were unable to locate bond form records which provide information including bond form numbers, the date and amount of bonds received, and bond dispositions.  Given the condition and unavailability of the various records, it is possible more monies may have been misappropriated than have been identified.

Significant internal control weaknesses and a lack of proper oversight or independent reviews over the municipal division functions have allowed the misappropriations to occur and go undetected.  During the audit period, accounting duties were not adequately segregated and there was little independent review of the municipal division's records.  Numerous instances were noted where receipt slips were not issued for some monies received and monies were not always deposited timely.  While monthly bank reconciliations and listings of open items (liabilities) were prepared, reconciling items were not properly documented and the open items listings appeared incomplete.  At September 30, 2004, liabilities exceeded the court bank account balance by nearly $35,000.

Problems with the division's disbursement procedures resulted in amounts due to the city, state, and various vendors.  Some restitution monies collected for non-sufficient fund check cases have not been disbursed and approximately $3,324 is due to various vendors. The division owes the state approximately $6,839 for various court fees that were not disbursed to the state for several months.  Fines and costs were not disbursed to the city timely or at all for several months and approximately $31,239 is due to the city.

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