YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 99-119
December 29, 1999

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 perform 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 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:

As discussed in the prior audit report, the Keller Memorial Hospital ceased operations in June 1995, and the hospital board of trustees was dissolved in May 1997. In June 1997 approximately $390,000 was transferred from closed hospital bank accounts to the county's General Revenue Fund. Of this amount, approximately $285,000 was property taxes paid by Howard County taxpayers for a hospital that was not in operation. We previously recommended the county consider returning the property tax windfall to taxpayers via a future tax reduction. No property tax reduction has been made and while the County Commission verbally indicated they have no plans to do that, this audit recommended that decision be formally documented. This property tax windfall has resulted in a significant increase in the General Revenue Fund's cash balance.

The salary commission met in December 1998, although statutorily they should meet in each odd-numbered year to determine the compensation to be paid to county officials beginning with their next term of office. Discussions documented in the salary commission minutes indicated that after considering the county's improved financial condition and other information, raises for all county officials were approved. While county officials said they consulted legal counsel and believed they were in statutory compliance, the audit report suggested the salary commission clearly document all decisions and include written legal opinions.

The county does not have procedures in place to ensure the county's budget documents are properly prepared and that they accurately present financial activities of the county. Several inaccuracies were noted in the information presented in the county's budget documents and some information was incomplete. Budgeted receipts and/or disbursements were unreasonable for some funds. Financial data for some funds was presented in both the General Revenue Fund budget and those funds' individual budgets. Actual expenditures exceeded budgeted amounts for some funds. The county's annual published financial statements did not include financial activity for many county funds and presented incorrect financial information for other county funds.

The county does not have a procedure in place to track federal awards. No expenditures information was provided on the county's Schedule of Expenditures of Federal Awards for the years ended December 31, 1998 and 1997.

Although the County Commission had a comprehensive personnel policies manual developed several years ago, the manual has never been officially approved and the policies are not consistently enforced. The county's payroll procedures are decentralized and each official and/or department is responsible for monitoring and documenting time worked by employees and maintaining vacation leave, sick leave, and compensatory time records.

The audit also made recommendations and suggestions to improve the county's tax book procedures and general fixed asset records. The audit also suggested improvements in controls and procedures of the Prosecuting Attorney, the Circuit Clerk, the Sheriff, the Health Department, and the Handicapped Services Board.

Complete Audit Report