July 24, 2003
Scotland County Audit Paints Positive Picture Despite Minor Issues
No one likes to hear the word audit (except maybe auditors) but it is a regular occurrence for public bodies such as city and county governments. Scotland County recently underwent an audit of the 2001 and 2002 fiscal years by the office of Missouri State Auditor Claire McCaskill as part of the regularly scheduled state reviews.
The audit was performed by Arthur White & Associates, L.L.C., Certified Public Accountants and was officially filed with the state on June 30. The audit was performed on the special-purpose financial state-ments of various funds main-tained by the county.
Overall the county received a positive report for the two fiscal years, which combined represented more than $5.2 million in expenditures and $5.5 million in revenues that left the county with a positive budget balance of more than $700,000 at the end of the 2002 year. The County Commission indicated it was pleased with the audit results and noted that appropriate steps were being taken to remedy the issues pinpointed by the report.
The county received a positive report with only a few issues of noncompliance with the government auditing standards.
Several issues were strictly record keeping suggestions passed on by the auditors.
State statutes require the county publish an annual financial statement in the local newspaper. The audit noted that the county has published the required statement but indicated the published report did not include all county funds.
The Scotland County Commission took the issue under advisement and noted it would make the necessary efforts to insure all funds are included in the annual financial statement for publication.
The audit also noted that state statutes prohibit local governments from making expenditures beyond the approved budget for the fiscal year. The audit noted that the county has exceeded budgeted amounts in different areas and recommended the county commission not authorize disbursements in excess of budgeted amounts. The report noted that in extenuating circumstances over expenditures are allowable but should be fully documented with the budgets properly amended and then forwarded to the state auditor's office.
Another point raised by the auditors was the control over county disbursements. The auditor noted the county commission uses a single stamp to approve payments. This stamp is easily accessible to the staff of the county clerk's office and while there were absolutely no signs of improprieties it still represented a lack of security.
The audit also noted that invoices were often not approved by the county clerk's office, nor were they cancelled as paid.
The report recommended better controls over cash disbursements and noted the failure to approve invoices, cancel invoices and limit access to the warrant approval stamp increased the risk of errors or irregularities. It went on simply to recommend that the commission either eliminate the stamp and approve warrants by signature or to limit the access to the stamp to only the county commission while also suggesting the county clerk insures that all invoices are signed and canceled appropriately to insure the proper paperwork procedure.
The county officials were in complete agreement with the recommendations.
The final bookkeeping issue related to fixed assets. The county is required to maintain a fixed assets list for all major equipment and property purchases or dispositions. The audit indicated that no purchases have been recorded on the fixed assets list since 1993 nor have any sales of county property been recorded since that time.
The county noted this was an oversight and indicated the list would be brought up to date.
The audit report went on to address the county's purchasing procedures. In particular the report sited several county purchases where there was no documentation or evidence that bids were sought prior to purchases being made.
Under Missouri Statute all purchases that exceed $4,500 are required to be done by bid with documentation being maintained for all vendors from whom bids were requested as well as all following bid information.
The audit noted that more than $225,000 in road rock was purchased without a bid process. Other purchases that did not seem to meet the law include $14,500 in steel beams, $6,080 in road and bridge supplies, $5,900 in truck repairs, $5,460 for courthouse repairs and $9,530 for pipe.
The County Commission countered the issue by noting that the remoteness of the region often limits the county in potential suppliers.
The auditor indicated that if circumstances are deemed to warrant a purchase without a bidding process that the issue must be documented to insure legal compliance.
Other issues reported in the audit included improved computer security as well as a documented policy for payments of expenses incurred by the county's prosecuting attorney's office.
The auditor noted that computer programs controlling property taxes, payroll and disbursement systems are not adequately restricted, meaning personnel in the county clerk, treasurer and collectors offices will be required to utilize passwords to prevent unauthorized access to the materials by other individuals.
The county is working with the software manufacturer to update the systems to include passwords and additional security.
The county also is in the process of securing an annual agreement with the prosecuting attorney's office to determine actual office expenses and the percentage of time the office is used for county business to allow the county to generate an appropriate formula for reimbursement of these costs.
The audit noted that during the 2001 and 2002 year prosecuting attorney Susan Henry's unsupported expense reimbursements were not reported on her W-2 as required by law.
The problem centers around the fact the prosecuting attorney does not maintain an office in the courthouse and throughout the years the number of past prosecuting attorneys have simply operated out of their private law office with the county paying a set allowance for office expenses, including utilities, postage, telephone, library/upkeep, etc. The process has been in place for numerous years but the auditor suggested the payments be based on actual expenditures documented by the office as opposed to a set monthly rate.
The final audit recommendation regarded minutes from the county commission meetings. The report noted that meeting minutes often lacked sufficient detail of discussions and votes taken. Items such as bid solicitations and selections, transfers between funds and various other decisions were not always documented to the fullest degree. Finally the auditor recommended the minutes be prepared in a more timely manner to allow for the documents to be reviewed to insure accuracy.
The county agreed to make efforts to improve the record keeping process for the meetings.