Report No. 2011-112
Findings in the audit of the Schuyler County Collector and Property Tax System
Property tax receipts of at least $568,974 are missing. A lack of oversight and a failure to segregate duties allowed the missing monies to go undetected. The former County Collector collected receipts but did not deposit some monies, issued checks from the County Collector's official bank account made payable to herself, and used error-correction fluid to alter tax book entries. Because of inadequate and incomplete records, the auditors could not determine whether additional monies are missing. Law enforcement authorities were alerted, and criminal charges have been filed against the former County Collector.
Property Tax System Controls and Procedures
The county did not prepare a separate delinquent property tax book, and to conceal the missing monies, the former County Collector improperly increased the delinquent tax totals on her annual settlements. No one totals the unpaid entries in the tax books, and as a result, the County Clerk and County Commission did not verify the delinquent tax totals. State law requires the County Collector to prepare the delinquent tax listings, the County Commission to examine and correct the listings and the County Clerk to make the listings into delinquent tax books and charge the County Collector with the amount of delinquent taxes to be collected.
The County Assessor's office recorded changes to property assessments on unnumbered manual forms which the former County Collector used to compute tax amounts and post additions and abatements manually to the tax books, and neither the County Clerk nor the County Commission verified the accuracy and completeness of the tax book additions and abatements made by the former County Collector.
Neither the County Clerk nor the County Commission adequately reviewed or verified the amounts on annual settlements prepared by the former County Collector, which allowed incorrect amounts on the settlements to go undetected.
County Collector's Controls and Procedures
The former County Collector did not record some property tax receipts on abstract reports and did not adequately reconcile receipts to bank deposits. Proper internal controls over receipts should include recording all paid tax statements on daily abstract or receipt lists, reconciling the lists to bank deposits, and reconciling the method of payment received to the composition of deposits.
The former County Collector did not always perform, or did not maintain documentation of, monthly bank reconciliations and did not adequately reconcile liabilities to the bank account balances. At June 30, 2011, identified liabilities exceeded the adjusted bank balance by $18,665.
The former County Collector did not issue receipts slips for some partial payments, did not use numbered receipt slips for partial payments, and did not maintain a ledger or other record to adequately identify partial payments collected and balances due from each taxpayer.
Commissions and Written Agreements
The former County Collector withheld commissions at a higher rate than allowed by law. The County Collector withheld approximately $5,250 more per year than she was entitled to withhold, which she remitted to the General Revenue Fund. The former County Collector also improperly withheld and remitted to the General Revenue Fund a one-half percent mailing commission on railroad and utility taxes, totaling $5,885 for tax years 2007 through 2010. The county collects property taxes for various cities in the county but did not have up-to-date written agreements for these services. State law requires such contracts to be in writing.
In the areas audited, the overall performance of this entity was Poor.*
American Recovery and Reinvestment Act 2009 (Federal Stimulus)
The Schuyler County Collector did not receive any federal stimulus monies during the audited time period.
*The rating(s) cover only audited areas and do not reflect an opinion on the overall operation of the entity. Within that context, the rating scale indicates the following:
The audit results indicate this entity is very well managed. The report contains no findings. In addition, if applicable, prior recommendations have been implemented.
The audit results indicate this entity is well managed. The report contains few findings, and the entity has indicated most or all recommendations have already been, or will be, implemented. In addition, if applicable, many of the prior recommendations have been implemented.
The audit results indicate this entity needs to improve operations in several areas. The report contains several findings, or one or more findings that require management's immediate attention, and/or the entity has indicated several recommendations will not be implemented. In addition, if applicable, several prior recommendations have not been implemented.
The audit results indicate this entity needs to significantly improve operations. The report contains numerous findings that require management's immediate attention, and/or the entity has indicated most recommendations will not be implemented. In addition, if applicable, most prior recommendations have not been implemented.