YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2005-97

December 2005

IMPORTANT:  The Missouri State Auditor is required by state law to conduct audits once every 4 years in counties, like St. Clair, that do not have a county auditor.  In addition to a financial and compliance audit of various county operating funds, the State Auditor's statutory audit covers additional areas of county operations, as well as the elected county officials, as required by Missouri's Constitution.

This audit of St. Clair County included additional areas of county operations, as well as the elected county officials.  The following concerns were noted as part of the audit:

• Health Center disbursements have exceeded receipts for three of the four years ended December 31, 2004.  As of December 31, 2004 and 2003 the Health Center had a negative cash balance.  Because of its poor financial condition and cash flow, the Health Center has had significant problems paying its bills on time.  The Health Center has routinely used tax anticipation note (TAN) proceeds to fund normal operating expenses, including payroll.  Without the use of the TAN proceeds, the Health Center would likely have been unable to operate. 

The Health Center paid off outstanding liabilities in February 2005 through a financing arrangement guaranteed by the U.S. Department of Agriculture.  Under the arrangement, a related Not For Profit (NFP) entity obtained a twenty-year $180,000 loan from a local bank, guaranteed by the U.S. Department of Agriculture.  The loan proceeds were used to purchase the Health Center's Osceola building from the Health Center's Board of Trustees.  The Health Center concurrently entered into a twenty-year lease-purchase arrangement under which the Health Center is leasing its former building back from the NFP and making monthly payments of $1,679.  The monthly payments are then being used by the NFP to repay the guaranteed loan and fund required reserve accounts. 

While this financing arrangement has allowed the Health Center to pay off prior liabilities, such long term financing is usually reserved for capital improvements, rather than immediate cash flow problems.  While the Health Center indicated that their intent is to pay off the loan as soon as possible, there are no written plans and no documentation of any projections made to see when this would be feasible.

• Health Center procedures related to budgets, receipting and depositing, capital assets, and write-offs of accounts receivable are in need of improvement.  Invoices were not always noted as paid or otherwise canceled upon payment and acknowledgement of receipt of goods or services is not required.  In addition, the Health   Center Board does not review and approve individual invoices and a supplementary listing of all disbursements approved for payment is not prepared to accompany the minutes nor are minutes being maintained for closed meetings.

• In the Sheriff's Department, accounting duties are not adequately segregated, the composition of receipts is not compared to the composition of deposits and receipts are not always deposited timely or intact.  Controls and procedures over preparing monthly listings of open items (liabilities) for the inmate account are not adequate.  Procedures for the billing of prisoner board are lacking and the Sheriff's Department does not bid food purchases for the jail.

In addition, Sheriff's Department employees have accumulated significant compensatory and holiday time balances.  According to Sheriff's Department records, compensatory time balances for the 74 deputies and jail employees totaled approximately 4,850 hours as of May 31, 2005.  Two employees had balances over 250 hours and three other employees had balances over 200 hours.  According to Sheriff's Department records, holiday time balances for deputies and jail employees totaled approximately 3,400 hours as of March 31, 2005 with ten employees having balances in excess of 100 hours.  

Also included in the audit were recommendations related to records and procedures for handling bad checks in the Prosecuting Attorney's Office, the county's capital assets, monitoring of fuel usage in county vehicles, preparation of the Schedule of Expenditures of Federal Awards, and the lack of written agreements with road districts for monies passed through to them.

Complete Audit Report