Audit Questions County Procedures
By Echo Menges
On January 30, 2012, the State Auditor, Tom Schweich, announced the beginning of the state audit of Knox County for the years 2010 and 2011. For the better part of 2012 a slew of auditors were in and out of the courthouse collecting information and taking stock of county finances and operations.
During the process two separate but related audits were performed. The first audit was subcontracted out to the certified public accounting firm Casey-Beard-Boehmer PC, which performed a financial audit of the county. That audit was released at the end of September 2012.
The second audit was performed by certified public accountants and staff representing State Auditor Tom Schweich and focused on the operations of the county. This second audit was just released on December 14, 2012, and delivered a severe blow, stunning several county officials when they learned Knox had been given the lowest performance rating possible, which is a rating of “poor.”
The audit document itself is 25 pages including a letter from Schweich to Knox County officials explaining the processes and objectives of the audit, basically saying Schweich’s staff was there to evaluate the internal workings of county offices including financial and management practices and to ensure the county is following state law.
During the audit Schweich’s staff went though county documents including meeting minutes, financial records and the counties policies and procedures. They also interviewed various county personnel and tested select county transactions.
Schweich’s staff ended up coming up with nine sections of “findings,” which take up 21 pages of the report. Under each section there is a list of problems that need to be fixed, several include state laws that have been broken, followed by the auditors’ recommendations about how to fix those problems followed by the counties responses to those recommendations.
The state audit of Knox County is a public document, published on Schweich’s web site, and is an up close look at some of the innermost workings of several county offices.
A “Citizen’s Summary,” which is a synopsis of each section of findings, has also been released by Schweich. It is included below.
Financial Condition
As noted in our prior audit, the General Revenue Fund and the Special Road and Bridge Fund remain in poor financial condition. Disbursements have generally exceeded receipts for both funds and are projected to do so again in fiscal year 2012. The county made some poor financial decisions which impacted the county’s financial condition.
Property Taxes
As noted in our prior audits, procedures over property tax additions and abatements are not properly segregated or monitored, and the County Clerk does not prepare or verify the accuracy of the current or delinquent tax books. The County Clerk does not maintain an account book with the County Collector, and there are no procedures to review the accuracy of the County Collector’s monthly or annual settlements. The method of payment for property tax receipts is not recorded in the property tax system.
Sales Taxes
The ballots, court orders, and county procedures supporting the capital improvement sales tax do not comply with state law. The county violated state law when it attempted to pass a second law enforcement sales tax twice in less than 12 months, and the tax would have exceeded the lawful limit if it had passed. The overall county sales tax records are insufficient.
Property Tax Levy Reductions
The county made several errors when calculating and reporting property tax levy reductions, which negatively impacted the county’s general revenue property tax receipts. The county misclassified a 2010 general revenue property levy tax reduction resulting in less property tax revenues, and the 2011 property tax reduction was not sufficient to off set sales taxes received.
County Procedures
As noted in prior audits, the county lacks adequate controls and procedures over fuel and vehicle use, and it does not maintain centralized records of leave balances for all county employees. Compensatory time for Sheriff’s department employees is not calculated in accordance with county policy. The county was required to pay $4,160 because it failed to timely protest the former County Clerk’s unemployment claim.
Road and Bridge Materials and Receipting Procedures
As noted in prior audits, the county does not adequately document or monitor monies due from material sales and rock purchases, making it difficult to ensure the county is receiving all monies it is due and paying only for rock actually received. The County Commission and County Clerk’s receipting procedures are not adequate.
Prosecuting Attorney’s Controls
Accounting duties are not adequately segregated, and the Prosecuting Attorney does not provide adequate oversight of financial functions and records. Receipts are not always deposited timely, receipt slips are not always issued, and accounting records are not adequately reconciled to deposits. Bad check and court-ordered restitution fees are not disbursed to the County Treasurer timely, and checks are not always issued in numerical sequence. As noted in our prior audit, liabilities have not been identified and reconciled with cash balances, and some restitution receipts had not been disbursed at the time of our review. The Prosecuting Attorney frequently reduces charges filed on traffic tickets in exchange for a defendant’s donation to the county, but this does not appear to be allowed by Missouri law.
Sheriff’s Controls
A Sheriff’s deputy was terminated and arrested for theft of seized property, but the Sheriff has not changed seized property procedures. Audit staff identified numerous control weaknesses in its review of receipts and deposits, though most weaknesses were resolved when these duties were assigned to the Sheriff’s current bookkeeper.
Computer Controls
As noted in prior audits, passwords are not required to log on to some county computer systems, and passwords for some computer systems are not changed on a periodic basis. None of the county computers have security controls to detect or prevent incorrect log-on attempts, and some county officials do not store backup data at an off-site location.
Additional Comments
Because counties are managed by several separately-elected individuals, an audit finding made with respect to one office does not necessarily apply to the operations in another office. The overall rating assigned to the county is intended to reflect the performance of the county as a whole. It does not indicate the performance of anyone elected official or county office.
