Post: 806
What do the last two Missouri State Audit Reports say about financial controls within the Gasconade County Sheriff's Department?
Copied and pasted below are the audit findings from this year and the audit findings from 2006. I'll let you read these audit findings for yourself. I'll let you be the judge.
AUGUST, 2010 AUDIT REPORT for GASCONADE COUNTY
Report No. 2010-105
Issued for years ending December 31, 2008 and 2009
By Missouri State Auditor, Susan Montee
From pages 8 and 9 of final audit report posted at http://auditor.mo.gov/press/2010-105.pdf .....
3. Sheriff's Controls and Procedures
Accounting duties are not adequately segregated, and the propriety of some disbursements appears questionable. The Sheriff's office collected approximately $52,000 and $76,000 during the years ended December 31, 2009 and 2008, respectively.
3.1 Segregation of duties
Accounting duties are not adequately segregated. The office manager is primarily responsible for all accounting duties in the Sheriff's office, including billing and collecting monies, recording transactions, making deposits, preparing and signing checks, and completing month-end reports and reconciliations.
Similar conditions were noted in our prior audit reports, and the Sheriff indicated duties cannot be segregated due to a lack of office staff. In lieu of segregating duties, the Sheriff requested the County Treasurer review the monthly bank reconciliations. While the County Treasurer receives and reviews the monthly bank reconciliations for the Sheriff's fee account, he generally just reviews the mathematical accuracy of the reconciliations and does not compare the reconciled bank balance to the Sheriff's accounting records.
Proper segregation of duties is necessary to ensure all transactions are accounted for properly and assets are adequately safeguarded. If adequate segregation cannot be achieved due to the limited staff available, the Sheriff's office should implement a documented independent or supervisory review to ensure the bank records are in agreement with the accounting records.
3.2 Questionable disbursements
Disbursements incurred by the Sheriff's office for advertising do not appear to represent a necessary use of county funds. During 2009 and 2008, the Sheriff's office purchased band booster advertisements totaling approximately $1,000 per year, which were paid from the county's General Revenue Fund and approved by the County Commission.
The Sheriff's office manager explained the advertisements are purchased to increase public awareness of the Sheriff's department. Starting in 2010, the County Commission no longer allows payment for advertising from the General Revenue Fund. The Sheriff currently pays these expenses from the Sheriff Department Law Enforcement (Civil Fees) Fund, which is controlled by the Sheriff and not by the County Commission.
The county residents have placed a fiduciary trust in county officials to ensure expenditures represent a necessary use of public funds. The Sheriff should evaluate the propriety of spending county funds on these types of items.
Recommendations To The Sheriff .....
3.1 Adequately segregate accounting duties to the extent possible or ensure documented supervisory or independent reviews are performed to ensure the bank records agree to the accounting records.
3.2 Ensure all disbursements from county funds represent necessary uses of county funds.
Auditee's response .....
The Sheriff provided the following written responses:
3.1 The Sheriff will personally review and initial all monthly bank records to ensure that the bank records and accounting records agree.
3.2 The Sheriff will personally ensure that all disbursements from county funds will represent the necessary use of county funds. In regards to the audit finding concerning advertisements done by the Sheriff's office, the Sheriff feels that community awareness programs are an integral part of the overall responsibility the Sheriff has to keep the citizens of Gasconade County informed of programs that are available to citizens and citizen groups and that the Sheriff will continue to support these awareness programs. The Sheriff understands that the County Commission will no longer allow for these types of disbursements.
NOVEMBER, 2006 AUDIT REPORT for GASCONADE COUNTY
Report No. 2006-67
Issued for audit years ending December 31, 2004 and 2005
By Missouri State Auditor, Claire McCaskill
From pages 32, 33, 34 and 35 of final audit report posted at http://auditor.mo.gov/press/2006-67.pdf .....
3. Sheriff's Controls and Procedures
Significant problems were noted in the controls over collections of the Sheriff's office, and as a result, the Sheriff's office did not detect $974 receipts which were not deposited and appear to be missing. Problems include a lack of segregation of duties or supervisory reviews, lack of reconciliations between receipts and deposits, receipt slips not issued for some collections, receipts not deposited intact in a timely manner, and no reconciliations between liabilities and cash balances. In addition, Sheriff's sales fees were not properly distributed to the county.
The Sheriff's Department handled receipts of approximately $54,000 and $111,000 during the years ended December 31, 2005 and 2004, respectively.
A. Cash receipts totaling $974 collected by the Sheriff's office from January 200 through December 2005 could not be traced to deposits into the Sheriff's bank accounts. We detected this problem while reconciling the Sheriff's receipt records to deposits. The majority of these receipts appear to be gun permit fees received in cash which were recorded on the cash control ledger but were not deposited.
These missing funds occurred during the terms of both the current Sheriff, who took office on January 1, 2005, and the former Sheriff. The current Sheriff indicated he would investigate this matter and attempt to resolve the discrepancies between receipts and deposits.
These missing funds were not detected by the Sheriff's office due to several record keeping deficiencies and internal control weaknesses, including a lack of reconciliation between receipts and deposits, as discussed below. In addition, due to the problems and weaknesses, additional monies may have been received and not deposited that were not discovered, in particular for periods prior to January 2004.
B. Cash custody and recordkeeping duties are not adequately segregated. The Sheriff's office manager is responsible for receiving, recording, depositing, and disbursing all monies, as well as reconciling the bank accounts. While the County Treasurer performs an independent review of the monthly bank reconciliations, there is no supervisory review or comparison of the Sheriff's accounting records to the bank records.
Internal controls would be improved by segregating the duties of receiving and depositing monies from recording and reconciling receipts. If proper segregation of duties cannot be achieved, at a minimum, periodic supervisory reviews of the accounting records should be performed and documented.
A similar condition was noted in a prior report.
C. Receipt slips are not issued for some monies received and receipts are not reconciled to deposits. In addition, the method of payment is not always noted on receipt slips.
To adequately account for collections and reduce the risk of loss or misuse of funds, pre-numbered receipt slips, which indicate the method of payment received, should be issued for all monies received immediately upon receipt. Receipts should also be reconciled to bank deposits, including the composition of monies received (i.e. cash, checks, or money orders). The lack of reconciliations between receipts and deposits appears to have allowed the shortage noted in Part A above to go undetected by the Sheriff's office.
D. Monies are not always deposited intact or in a timely manner. For example, a $222 cash bond received on October 12, 2005 was not deposited until October 24, 2005. In addition, as noted in Part A above, some cash receipts could not be traced to any deposits, and some cash receipts were withheld and included in subsequent deposits. For example, $120 cash received between December 21, 2004 and January 4, 2005, was withheld from the January 4, 2005 deposit and subsequently deposited with other receipts on January 20, 2005. Our review noted deposits are generally made three to four times a month and the average deposit during October through December 2005, was $1,380.
To adequately account for collections and reduce the risk of loss or misuse of funds, deposits should be made intact on a timely basis. Deposits should be more frequent if significant amounts of cash are collected.
E. The Sheriff does not have procedures to ensure all monies received are disbursed. All monies received by the Sheriff, which includes cash bonds and accountable fees, are normally disbursed by the end of each month and the Sheriff's bank account should zero out at the end of each month. However, on December 31, 2005, the account had a balance of $1,343 which was unidentified. This amount fluctuates from month to month because of receipts that were not deposited and the overall lack of reconciliations.
The Sheriff should adopt procedures to reconcile all receipts and deposits to amounts disbursed to ensure the bank account zeroes out each month, or if any receipts cannot be disbursed at the end of the month, these amounts should be identified and reconciled to the bank balances. Any unidentified amounts in the bank account should be investigated and resolved. Various statutory provisions, including Sections 447.500 through 447.595, RSMo, provide for the disposition of unclaimed monies.
F. Some Sheriff's sale fees were not properly disbursed. The Sheriff deposited proceeds from a partition sale held in May 2004 into the Sheriff's fee account and withheld $463 in accountable fees; however, this amount was not disbursed to the county's General Revenue Fund and remains in the Sheriff's bank account. The Sheriff also withheld fees from another partition sale held in March 2005; however, the amount disbursed to the county was $89 more than the accountable fee of $150. The $89 had already been disbursed to a vendor for towing fees, causing a shortage in the account. These errors were apparently not discovered because of the lack of reconciliations noted in Part E above.
Attorney General’s Opinion No. 108, 1970 to Holman, provides that commissions on partition sales are accountable fees and should be paid into the county’s General Revenue Fund. The Sheriff should ensure that all accountable fees withheld from partition sale proceeds are properly disbursed to the county.
WE RECOMMEND the Sheriff:
A. Follow up on this matter and reimburse his official account for any amounts remaining that could not be traced to a deposit.
B. Segregate accounting duties to the extent possible and ensure periodic supervisory reviews are performed and documented.
C. Require receipt slips be issued for all monies received, and ensure the method of payment is recorded on the receipt slips and receipts are reconciled to deposits.
D. Deposit all monies intact on a timely basis.
E. Ensure all receipts are disbursed and the balance of the bank account zeroes out at the end of each month. Any receipts that cannot be disbursed by the end of the month should be documented and reconciled to the bank balance. Amounts which cannot be identified should be investigated, and any monies remaining unclaimed should be disposed of in accordance with state law.
F. Correct the errors noted above in the distribution of partition sale fees and ensure all fees from future sales are properly disbursed.
AUDITEE'S RESPONSE
A. A follow up done by the Office Manager appears to have located $199 of the $974. In addition, another $323.65 appears to have been deposited that was not recorded, but some of this may represent checks received for serving papers that was not recorded and may not be part of the $974. Additional follow up on this matter will be considered, and upon the conclusion of our work, we will make a determination on how to reimburse the account for the remaining difference.
B. All accounting procedures will be checked and double checked by the Office Manager and then checked by me personally periodically. Accounts will also continue to be checked by the County Treasurer.
C. Receipt slips will be issued for all monies received to ensure proper accounting. Receipts will be reconciled to deposits.
D. Daily deposits will be made.
E. The bank account will be zeroed out at the end of each month. Recently, a new bank account was opened and the old one closed to help ensure the account zeroes out. I will check this periodically.
F. All fee monies collected as a result of Sheriff's sales will be disbursed according to state law.
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So I ask you .....
- Do you see any similarities in the audit findings from November, 2006 to August, 2010? What do these "similar findings" say about efforts made by the Sheriff's Department to correct deficiencies from one audit to the next? Do you have any confidence in the Sheriff's Department system of financial controls?
- What do you think about the "questionable disbursements" for "advertising"? Would you like to know more about those "advertisements"? (You've seen them in the Hermann Advertiser-Courier ... Hermann Bearcat Booster ads.) Would you like to know what the purpose of the "Sheriff's Department Law Enforcement (Civil Fees) Fund" is and whether these funds should be used for "political advertisements"?
- Perhaps you noticed other things from the last two state audits which give rise to further questions. If so, what questions do you have?
