YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

September 30, 2003

Report No. 2003-106

IMPORTANT:  The Missouri State Auditor is required by Missouri law to conduct audits only once every four years in counties, like Pemiscot, which do not have a county auditor.  However, to assist such counties in meeting federal audit requirements, the State Auditor will also provide 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 it 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 Pemiscot County included additional areas of county operations, as well as the elected county officials.  The following concerns were noted as part of the audit: 

• The county's General Revenue Fund and Law Enforcement Sales Tax Fund are in weak financial condition.  The General Revenue Fund cash balance decreased from $204,159 at January 1, 2001 to $6,522 at December 31, 2002, while the Law Enforcement Sales Tax Fund cash balance decreased from $495,139 at January 1, 2001 to $42,999 at December 31, 2002.  As of September 22, 2003, the General Revenue Fund had a negative cash balance of $11,334 and the Law Enforcement Sales Tax Fund had a zero cash balance.

A significant factor in the decline of the financial condition has been the operation of the Pemiscot County Criminal Justice Center and Jail, which opened during 2002.  Personnel and other operating costs of the Sheriff's department and jail have increased from approximately $670,000 for the year ended December 31, 2000 to over $1,300,000 for the year ended December 31, 2002.  The law enforcement sales tax of approximately $325,000 is not sufficient to cover the increase costs of the Sheriff's department and jail.

The County Commission needs to closely monitor revenues and expenditures and take steps to increase the cash balances of the General Revenue Fund and the Law Enforcement Sales Tax Fund.

• Actual disbursements exceeded the budgeted amounts in various funds.  Budgeted amounts for the General Revenue Fund, Capital Improvement Sales Tax Fund, and Law Enforcement Sales Tax Fund were exceeded by $91,472,  $180,682, and $246,821, respectively, for the year ended December 31, 2002. 
   
• A state law, Section 50.333.13, RSMo, enacted in 1997 allowed salary commissions meeting in 1997 to provide mid-term salary increases for associate county commissioners elected in 1996 due to the fact that their terms were increased from two years to four years.  Based on this law and the Prosecuting Attorney's legal opinion, in 1999 Pemiscot County's Associate County Commissioners' salaries were each increased approximately $7,400 yearly, according to salary commission minutes.

On May 15, 2001, the Missouri Supreme Court handed down an opinion that holds that all raises given pursuant to this statute section are unconstitutional.  Based on the Supreme Court decision, the raises given to each of the Associate County Commissioners, totaling approximately $14,800 for the two years ended December 31, 2000, should be repaid. 

• The County Treasurer's salary was increased $10,400 annually, effective with the start of a new term of office on January 1, 2003, based on approval given by the salary commission at a meeting held in September 2002.  There was no legal documentation supporting whether that meeting complied with Section 50.333, RSMo 2000.
   
• Formal budgets were not prepared for various county funds for the years ended December 31, 2002 and 2001.  In addition, the county's annual published financial statements did not include the financial activity of some funds as required.
   
• The county has not established adequate procedures to monitor collateral securities and commercial insurance provided through surety bonds pledged by its depository bank resulting in funds being undercollateralized by approximately $1,700,000 and $1,300,000 for a few days during January 2003 and January 2002, respectively. 
   
• Some expenditure concerns included the county not entering into formal written agreements with their contract laborers, not obtaining a professional appraisal prior to a $5,040 purchase of land, paying employees a per diem of $30 a day to cover miscellaneous travel expenses, and obtaining a bank loan without determining its legality.

Other areas where concerns were noted included employee timesheets and leave records, general fixed asset records, and computer controls.  In addition, recommendations were made to improve the accounting controls and procedures of the Probate Division, Prosecuting Attorney, Public Administrator, Sheriff, Health Center, and Senate Bill 40 Board.

Complete Audit Report