Clark County Audit Questions Practices-Part 2
Clark County Audit Questions Practices-Part 2
Editor’s Note: This is the second part of our report on the Clark County audit report, issued by Missouri State Auditor Susan Montee last week. The report looks at the finances and procedures of county offices, and makes a variety of recommendations.
Sheriff Accounting Controls and Procedures
Cash custody and recordkeeping duties have not been adequately segregated. The civil process log is not updated to show when fees are received. Accounting records are not reconciled with the bank account balance monthly and procedures for handling old outstanding checks are not in accordance with state law. In addition, board bill procedures are not adequate and the Sheriff does not have written contracts with the surrounding counties for boarding prisoners. A cost analysis of the county preparing inmate meals versus outsourcing has never been performed. Records and monitoring procedures for county vehicles used by Sheriff’s deputies are not sufficient. Also, fees withheld from a partition sale were not calculated in accordance with state laws.
A. Cash custody and recordkeeping duties have not been adequately segregated. The office clerk receipts, deposits, prepares bank reconciliations, and writes checks. The Sheriff does not review any of the financial records. In addition, the numerical sequences of receipt slips and checks are not accounted for properly.
B. A log for the serving of civil papers is maintained, but the log is not updated to showwhen payment of the fee is received.
C. A one write ledger is maintained for fees collected, however, it is not compared to the reconciled bank account balance when the bank reconciliation is performed each month.
D. The Sheriff disbursed $13,241 and $26,475 in 2006 and 2005, respectively, to the County Treasurer from the collection of board bills. The Sheriff’s Department houses inmates for other counties and bills them for these services. The following concerns were noted:
1. Board bill procedures are not adequate. When the Sheriff’s Department bills an entity, a copy of the bill is put in a file. When payment is received, a copy of the receipt slip issued for the payment and the check received is placed in the file with the copy of the board bill. However, receipts are not matched with the bills in a timely manner, so the department does not know how much is owed to the Sheriff at any given time or how long some bills have gone unpaid. In addition, the Sheriff’s Department does not bill other entities on a monthly basis for holding their inmates. The entities are billed when the inmate is released from jail, which could be in excess of a year. Considering the financial condition of the county, it is imperative that the Sheriff’s Department take all steps necessary to collect board bills owed to the department in a timely manner and bill entities monthly to ensure more timely matching of revenues to expenses.
2. The Sheriff has verbal agreements with Schuyler and Scotland counties for the boarding of inmates at the amount of $35 per day. Section 432.070, RSMo, requires the county to have all contracts in writing. Written agreements should be prepared with all political subdivisions for services provided. The agreements should be updated periodically, clearly specify the arrangements between parties for the services provided, and be approved by the County Commission.
E. Prior to 2008, the county employed a cook to prepare meals for inmates. A decision was made to outsource inmate meals starting in 2008; however, a cost analysis comparing the cost of the county preparing the inmate meals versus outsourcing the meals has never been performed. In 2007, the county spent approximately $43,200 on meals and the cook’s salary. For 2008, the county has
See Audit, Page 12
budgeted approximately $97,800 for meals.
F. Records and monitoring procedures for county vehicles used by Sheriff’s deputies are not sufficient.
G. The Sheriff withheld $1,285 in accountable fees from a partition sale. The Sheriff indicated that he had relied on the individual’s attorney to calculate the fees. Based on our calculation, the fees in this case should have been $195.
Recommendation
WE RECOMMEND the Sheriff:
A. Segregate accounting duties to the extent possible and ensure periodic supervisory reviews are performed and documented. In addition, account for the numerical sequence of receipt slips and checks.
B. Ensure that the civil process log is updated each time payment for fees is received and reconcile the log to deposits.
C. Reconcile the accounting records to the account balance monthly, and investigate any differences. In addition, if payees of old outstanding checks cannot be located, the checks should be voided and disposed of in accordance with state law.
D.1. Bill entities on a monthly basis for housing inmates and compare board billings and the subsequent payments received on a regular basis to ensure payments are received timely and rebill any unpaid amounts.
2. And the County Commission obtain written contracts for all services.
E. Perform a cost analysis to determine the most cost effective method of providing inmate meals.
F. Periodically review fuel logs and reconcile them to fuel purchases. In addition, enter the cash fuel purchases and mileage for these vehicles into the computer system.
G. Calculate all partition sale fees in accordance with state law.
AUDITEE’S RESPONSE
The Sheriff indicated:
A,B, D1&F. These recommendations have already been implemented.
C. We will implement this recommendation.
D.2. I have attempted to get written contracts with those counties.
E. This was the commission’s decision.
G. I relied on an attorney’s calculation for this sale, I will calculate this myself from now on.
The County Commission indicated:
D. We will leave this to the Sheriff.
E. We now realize that we did not do enough of an analysis on this contract; however, our goal was not simply to save money but to gain more control over this area and the number of people who eat there. The number you have presented for 2008 was simply our estimate of the cost if the jail operated at full capacity at all times, which does not always happen.
Currently, we feel that the costs this year are comparable to last year. We will continue to monitor the costs of this service compared to having someone prepare the food at the jail.
Inmate Commissary Accounting Controls and Procedures
The Sheriff’s Department procedures for the inmate commissary are in need of improvement.
Approximately $200 a month is transferred from inmate funds for commissary purchases.
The Sheriff keeps the commissary profits in a locked cabinet in the jailer’s office. These profits are used to purchase inventory items and items for the jail. A ledger is maintained to track the profits and purchases. As of December 31, 2007, the Sheriff had approximately $465 on hand.
• The Sheriff’s Department does not maintain a bank account for inmate funds and cash is disbursed for commissary purchases.
• Prenumbered receipt slips are not issued for inmate monies received.
• The Sheriff maintains profits from the commissary fund outside the county treasury.
• Commissary order forms are not maintained. After the purchased items have been delivered to the inmate, the order forms are destroyed.
• Only the total transferred from the inmate’s envelopes is recorded on the commissary ledger, not the amount per inmate. As a result, the transfers cannot be readily agreed to the inmate records.
• The Sheriff’s Department does not periodically calculate the profit of items sold in the commissary to ensure the amounts received are reasonable.
To adequately safeguard receipts and reduce the risk of loss, theft, or misuse of funds, a bank account should be maintained for inmate monies and commissary profits, all receipts should be deposited intact on a timely basis, all disbursements should be made by check, and the account balance should be reconciled to the list of inmate balances and calculated profit monthly. The profits should then be transferred to the County Treasurer. To help ensure the accuracy of commissary account balances, procedures should be developed to ensure that order forms are maintained. In addition, prenumbered receipt slips should be issued for all monies received immediately upon receipt and the receipt slip numbers should be accounted for properly.
The selling price of all commissary items should be set at the same percentage over cost and the profit periodically compared to purchases to ensure the proper amount of profit is on hand. Any unusual fluctuations of profit should be investigated and any explanations should be documented to lessen the possibility of misuse, loss, or theft of commissary items going undetected.
Recommendation
WE RECOMMEND the Sheriff open and maintain a bank account for all inmate monies and ensure prenumbered receipt slips are issued for all inmate monies received and disbursements are made by check. The balance of the inmate account should be reconciled to the inmate records monthly and commissary profits should be transferred to the County Treasurer. In addition, the selling price of all commissary items should be set at the same percentage above cost and profits should be periodically compared to purchases. Any unusual fluctuations should be investigated and explanations documented. Also, ensure commissary order forms are maintained for all purchases.
AUDITEE’S RESPONSE
The Sheriff indicated:
We will not turn over profit to the treasurer, but we will open a bank account for the Commissary profit. We will also look into opening a bank account for inmates monies . We have already started keeping order forms and we will implement all of the other recommendations.
Associate Court Accounting Controls and Procedures
The Associate Court’s duties of receiving, recording, and depositing receipts are not adequately segregated. The numerical sequences of receipt slips and checks are not accounted for properly and manual receipt slips are not traced to the Justice Information System (JIS). Monies received are not always deposited in a timely manner. Bank reconciliations are not done on a timely basis. In addition, the Associate Circuit Court does not adequately follow-up on bonds posted by defendants who fail to make the required court appearances. Also, the court could not provide legal authority for the collection of community service fees from defendants ordered to perform community service.
The Associate Circuit Court processes monies for civil, criminal and probate cases, traffic tickets, and bonds. Receipts totaled approximately $230,000 and $300,000 for the years ended December 31, 2006 and 2005, respectively.
A. The duties of receiving, recording, and depositing receipts are not adequately segregated.
B. The numerical sequence of receipt slips and checks are not accounted for properly.
C. Monies received are not always deposited in a timely manner. Monies are usually collected each business day, but deposits are normally made only two to five times per month.
D. Bank reconciliations are not prepared on a timely basis. As of February 2008, the bank reconciliation for December 2006 had not been received by the Associate Circuit Court. The Office of State Court Administrator (OSCA) has been performing the bank reconciliations for the court since March 2002. The most recent bank reconciliation completed as of February 2008 was for July 2006. The July 2006 bank reconciliation included numerous reconciling items, totaling $707, that had not been investigated and could not be explained by the court.
E. The Associate Circuit Court does not adequately follow-up on bonds posted by defendants who fail to make the required court appearances. During a review of 15 case files, four instances totaling $1,196 were noted where a bond was not forfeited when the defendant failed to appear on the court date. As of July 31, 2006, the court was holding approximately $26,300 in bonds in its bank account.
E. The Associate Circuit Court does not adequately follow-up on bonds posted by defendants who fail to make the required court appearances. During a review of 15 case files, four instances totaling $1,196 were noted where a bond was not forfeited when the defendant failed to appear on the court date. As of July 31, 2006, the court was holding approximately $26,300 in bonds in its bank account.
Recommendation
WE RECOMMEND the Associate Circuit Judge:
A. Segregate accounting duties to the extent possible or ensure periodic supervisory reviews are performed and documented.
B. Ensure the numerical sequence of receipt slips and checks are accounted for properly and develop procedures to ensure that manual receipts are posted to the JIS.
C. Ensure all receipts are deposited intact on a timely basis.
D. Ensure the accounting records are reconciled to the bank accounts on a timely basis. In addition, any differences and reconciling items identified should be resolved on a timely basis.
E. Implement adequate procedures to forfeit bonds when appropriate.
F. Determine whether clear legal authority exists to collect community service fees.
AUDITEE’S RESPONSE
The Associate Circuit Judge indicated:
A. The clerks have started reviewing each other’s deposits to make sure that the actual cash and checks reconcile to the JIS generated reports. Also, the clerks are checking manual receipts carefully to see that all are recorded to JIS immediately.
B. The numerical sequence of receipts is controlled completely and totally by the JIS computer program. The clerks do not have anything to do with that. But the clerks are looking at the JIS generated receipt reports to make sure the numbers are consecutive. All checks were accounted for during the course of the audit. All manual receipts were traced to the JIS system, as well.
C. The clerks are making more timely deposits. It is difficult, but we think we have shown some improvement.
D. The bank reconciliations are being followed up on with OSCA. The Associate Clerk has requested OSCA’s help repeatedly. The July 2006 bank reconciliation was off by less than $1. There were negative adjustments of $423 and positive adjustments of $1,059.93. All adjustments were explained by the clerk. Within the next 30 days, a formal request will be made to OSCA to send an accounting specialist to Clark County to affect a permanent solution.
E. Bonds are followed up on defendants who have posted. If they do not appear on their court date, a warrant is issued. Bond forfeiture and judgment thereon is ordered upon application of the state.
F. The court does not collect community service fees except on old cases that were assessed by the court years prior to the request of the auditors not to assess these fees any longer. The only other cases that the court pays the community service fees on are ones where the defendant consents to the payment out of a posted bond. The community service fee is assessed by the judge depending upon the severity of the charge. For instance, DWI’s are assessed 40 hours of work and the fee is $1000. The judge sticks to the formula of $2.50 per hour of work. The fund created by the county supports the salary of a supervisor, transportation and all tools necessary to perform the work. This program is modeled after a St. Louis County program that has operated over the last 30 years.
Circuit Clerk Accounting Controls and Procedure
Accrued case costs are not actively monitored and pursued. Bank reconciliations are not prepared on a timely basis and records and monitoring procedures for open items listings are not sufficient. Also, the interest earned from the Circuit Clerk’s general account is not transferred to the Circuit Clerk Interest Fund on a timely basis. Some invoices are not maintained for purchases made from the interest fund.s
A. The Circuit Clerk does not actively monitor or pursue collection of accrued case costs in a timely manner. Follow up procedures are performed twice a year on civil cases with outstanding costs. For criminal cases, a fee bill is sent to the individual after they are released from jail; however, no follow up procedures are performed.
B. Bank reconciliations are not prepared on a timely basis. The bank reconciliation for December 2006 was not received by the Circuit Clerk until June 2007. The Office of the State Court Administrator (OSCA) has been performing the bank reconciliations for the Circuit Court since the conversion to the JIS in September 2001.
C. Records and monitoring procedures for the monthly listings of open items are not sufficient as follows.
1. The monthly listing of open items (liabilities) for December 2006 did not agree with the December 31, 2006, reconciled bank balance for the Circuit
Clerk’s JIS account. At December 31, 2006, the reconciled bank balance of the JIS account was $51,828 while the open items listing prepared from the Circuit Clerk’s accounting system (JIS) totaled $52,758, indicating a potential shortage in the account of $930. The Circuit Clerk could not explain this difference nor was the difference investigated.
2. The Circuit Clerk does not maintain copies of open items listings for all of her bank reconciliations. While the total open items is listed on the bank reconciliation, a detailed listing is not printed and retained.
3. The court does not adequately review the status of old open items. The December 28, 2006 open items listing included approximately 170 cases totaling approximately $62,000. Some of these cases have not had activity for several years, including one case that was dismissed in 1982.
D. The Circuit Clerk Interest Fund controls are in need of improvement as follows:
1. Interest earned from June 2006 through December 2006 on the JIS account totaling $751 was not transferred to the interest fund and posted to the fund ledger until March 29, 2007. To adequately safeguard receipts and to reduce the risk of misuse of funds, receipts should be posted to the accounting records on a timely basis.
2. The Circuit Clerk does not maintain copies of all invoices for purchases made from her interest fund. Invoices could not be located for two purchases totaling $167. Record retention is necessary to ensure the validity of transactions and provide an audit trail.
Recommendation
WE RECOMMEND the Circuit Clerk:
A. Follow up on criminal cases for individuals who are not on probation and consider signing up for the state debt collection agency. In addition, ensure the judge is notified by the court of all criminal cases with unpaid costs before the individuals are released from probation.
B. Prepare bank reconciliations on a timely basis, and investigate and resolve all adjustments to the bank reconciliations in a timely manner.
C.1. Reconcile open items to cash balances on a monthly basis and investigate any differences in a timely manner.
2. Retain all accounting records related to all bank accounts.
3. Routinely review open items and disburse or dispose of monies as appropriate.
D.1. Post interest to the interest fund ledger on a timely basis.
2. Maintain documentation of all interest fund purchases.
AUDITEE’S RESPONSE
The Circuit Clerk indicated:
A. Cases are being reviewed more frequently, and we are looking into using debt collection.
B. We are working with OSCA to prepare these more timely.
C.1&C.3. These recommendations will be implemented.
C.2&D.1. These recommendations have already been implemented.
D.2. We always maintain documentation for purchases. These invoices were misplaced.
Prosecuting Attorney Donations
The Prosecuting Attorney frequently reduces charges filed on traffic tickets by requiring the defendants to make a “donation” to the Clark County Youth Fund or Dollars for Scholars Fund as a condition of reducing the charges and entering into a plea bargain. The donations are distributed to various not-for-profit organizations and other political subdivisions; however, the Prosecuting Attorney does not make the judge aware of the donation when presenting the plea bargain to the court. Receipts from donations totaled approximately $25,800 and $35,700 for the years ended December 31, 2006 and 2005, respectively.
A. The donations are distributed to various non-for-profit organizations and other political subdivisions. By accepting the donations, it is possible that fines and penalties which may otherwise have been assessed and credited to the county school fund were not collected and distributed in accordance with an established formula designed to benefit all schools within the county.
B. The Prosecuting Attorney does not make the judge aware of the donation when presenting the plea bargain to the court.
Recommendation
WE RECOMMEND the Prosecuting Attorney:
A. Review the practice of requiring donations as part of reducing charges files.
B. Evaluate with the Associate Circuit Judge whether accepting donations as part of the plea bargain allows the judge to make an informed decision on cases and whether
this practice should be discontinued.
AUDITEE’S RESPONSE
The Prosecuting Attorney indicated:
A. I do not plan to implement this recommendation.
B. I think that it is important that these funds benefit the youth of Clark County.
The Associate Circuit Judge indicated:
B. I sent a letter to the Prosecuting Attorney requesting he cease this practice in response to your prior recommendation.
Drug Court Accounting Controls and Procedures
Prenumbered receipt slips are not used for monies received and the method of payment is not always noted on receipt slips issued. The composition of the receipt slips is not reconciled to the composition of the deposits. Also, some concerns were noted regarding disbursements.
A. Receipt slips are issued for monies received; however, the receipt slips are not prenumbered and the method of payment is not noted on some receipt slips issued. Receipt slip sequence numbers are handwritten on the slips as they are issued. While the amount of each deposit is reconciled with the
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corresponding receipt slips, the Drug Court cannot ensure the composition of the deposit agrees to the composition of the monies actually received.
B. A review of the Drug Court disbursements revealed the following concerns:
1) The Drug Court purchased 30 cases (each containing 10 boxes of 50 or 100 pairs) of latex gloves on June 26, 2007 for $1,778 from the Fee Account. The Drug Court Clerk indicated that the gloves were purchased because the federal drug court grant was ending and the federal government stated that all of the grant money needed to be spent or given back. However, this disbursement appears unreasonable when considering only one case of gloves has been partially used as of January 2008. The court should ensure all disbursements are reasonable and a prudent use of taxpayer money.
2) Invoices are not always marked paid or otherwise canceled upon payment.
Canceling invoices and all other supporting documentation reduces the likelihood of duplicate payments and requiring acknowledgement of receipt of goods and/or services prior to payment will ensure the Drug Court actually received all items paid for.
3) The court did not solicit bids or retain documentation of price comparisons for drug test kits, which were purchased for $10,006. Section 50.660, RSMo, requires the advertisement for bids on all purchases of $4,500 ($6,000 as of August 2007) or more from any one person, firm or corporation during any period of ninety days. outine use of a competitive procurement process (advertisement for bids, phone solicitations, written requests for proposals, etc.) for major purchases ensures the county has made every effort to receive the best and lowest price and all interested parties are given an equal opportunity to participate in county business. Documentation of the various proposals received, and the county’s selection process and criteria should be retained to demonstrate compliance with the law and support decisions made.
Recommendation
WE RECOMMEND the Associate Circuit Judge:
A. Require prenumbered receipt slips be issued for all monies received. In addition, ensure the method of payment is recorded on the receipt slips and reconciled to the composition of deposits.
B.1. Ensure all disbursements are reasonable and a prudent use of taxpayer money.
2. Ensure all paid invoices are marked as such in order to prevent reuse.
3. Perform a competitive procurement process for all major purchases and maintain documentation of decisions made.
AUDITEE’S RESPONSE
The Associate Circuit Judge indicated:
A. When our program began in 2002, we used pre-numbered receipt slips. When we ordered new receipt books the vendor did not bring in the pre-numbered series that he had provided before and we were unable to return them. We used the new series because the number of the receipts in the receipt books was noted by the vendor on the cover of each receipt book and each receipt was accounted for in each book. The auditors advised that when ordering new receipt books to get the numbered series. This will be implemented as directed. We have already implemented the suggestion of recording the method of payment on each receipt and reconciling the composition of deposits.
B.1. The drug court purchased 23 boxes of latex gloves in 2003, 25 boxes again in 2004, 70 boxes in 2005, 50 in March of 2007, and 300 boxes in June 2007. With the end of the federal grant it was necessary to spend down the drug court fees fund. It was determined that one of the very necessary items of the protection of the drug testing staff, trackers, and law enforcement was the purchase of latex gloves. It was calculated with the increase in participation and the addition of Scotland County that 300 boxes was not an unreasonable amount. We found it necessary to have these gloves located at the Clark County Sheriff’s Office, Kahoka Police Department, Scotland County Sheriff’s Department, and the Memphis Police Department.
They are also in all patrol units for Clark and Scotland and they use them when dealing with drug related scenes. All of the above agencies are assisting with drug court screening, drug testing, and program compliance. The purpose of these gloves are for drug testing, medication compliance, searches of participants’ homes, and scene investigation by all law enforcement agencies. We have thus far performed over 11,000 drug tests at the Clark County Sheriff’s Office. This number does not include all of the in-home testing done by the trackers. The tracker also do med checks and use 1 box every week to 10 days for this.
2. We currently attach a copy of all checks to the paid invoices but will immediately begin the practice of marking paid on all invoices.
3. Pricing was obtained from different vendors through phone solicitations and the MCIC system. We also obtained pricing sheets from American Bio Medica on February 23, 2005 and had the pricing sheets from Drug Court Testing Services who are also state contractors. These were located in the drug testing information file and we did not attach them to the invoices. It was determined that the contract the Clark County Sheriff’s Department had in place was the most competitive. We did not print a coy of the MCIC state contracts and will make sure from this point forward that this practice is put in place and attached to all invoices. We will also put in place a written quote system and not the verbal solicitation for all vendors in place and will attach the written pricing sheets that we are given to all invoices.
Ex Officio Recorder of Deeds’ Accounting Controls and Procedures
Listings of open items are not prepared and reconciled with the cash balances on a monthly basis and no written contracts exist between the Ex Officio Recorder of Deeds and two local banks for recording services. The Ex Officio Recorder of Deeds processed approximately $64,000 a year in fees during 2006 and 2005.
A. Listings of open items are not prepared and reconciled with the cash balances on a monthly basis. After the monthly disbursements, the reconciled bank balance at December 31, 2006, was $464. However, the Ex Officio Recorder of Deeds could not explain this difference, except that some would be accumulated interest and some would be the calculation errors in her checkbook dating back to at least 2002 noted in our prior report.
B. No written contracts exist between the Ex Officio Recorder of Deeds and two local banks for recording services. The Ex Officio Recorder of Deeds received approximately $10,400 and $13,900 in 2006 and 2005, respectively, for recording services for these banks.
Recommendation
WE RECOMMEND the Ex Officio Recorder of Deeds:
A. Prepare a monthly listing of open items and reconcile it to cash balance. In addition calculation errors in the checkbook should be investigated and corrected.
B. Obtain written agreements with the banks.
AUDITEE’S RESPONSE
The Recorder indicated:
A. This recommendation has already been implemented and we are currently investigating the difference noted.
B. This recommendation will be implemented.