12/15/2022 - Jefferson City, Mo.
Today, State Auditor Nicole
Galloway released her follow-up report on the city of Cross Timbers,
a
town of fewer than 120 in Hickory County. A citizen-initiated audit
released in March gave a rating of "poor"; the audit found tens
of thousands of dollars misappropriated by a former city clerk and a city in
poor financial condition.
The follow-up report measured the progress of city officials in
implementing the recommendations on 31 audit findings. Auditors found that while
some progress has been made, more than half of the recommendations were only
partially implemented or not implemented at all.
In the audit released in March,
auditors found at least $44,452 was misappropriated by former city clerk January
"Nicki" Clark during her employment with the city from 2017 to 2020. This
included payments to the city never deposited; improper adjustments to utility
payments, including adjustments to Clark's own utility account; and overcompensation
to herself.
Bank records obtained by the State Auditor's Office and provided
to law enforcement established that there were cash deposits into her personal
bank account of amounts similar to or greater than the amount of missing city
receipts. Clark was charged with felony stealing by the Hickory County
Prosecuting Attorney. That criminal case remains on-going, with the State Auditor's
Public Corruption and Fraud Unit providing support.
The audit also found city finances in poor financial condition,
and that the Board did not adequately monitor the city's financial condition.
As a result, expenses exceeded income in 2018 and 2019, causing cash balances
to decrease. The cash flow problems resulted in the city not paying bills
timely.
The follow-up report found that of the 31 audit recommendations
reviewed, city officials have implemented six and are in progress on another six.
Of the remaining recommendations, thirteen have been partially implemented and
another six have not been implemented.
Auditors noted that the city is paying all current bills due and
has implemented procedures to monitor spending and cash balances each month.
The city is making monthly agreed-upon payments on past due balances owed for
electric, payroll taxes, pumping equipment and services, and the state audit. However,
as of August 2022, the city still owed over $62,000 to these vendors and
entities.
Auditors also found the city has implemented some of the
recommended electronic data security measures. Officials also have made
progress on employee payroll and other accounting matters, including paying
past due payroll taxes to the IRS and sewer loan payments.
The report noted that the city's Board of Aldermen has not
obtained annual audits of the combined water and sewer system as required by
state law and loan/grant, nor has the Board ensured publication of the city's
semiannual financial statements, as required by law; and the Board has not
determined the proper classification for the city clerk and maintenance
supervisor to ensure compliance with state and federal laws and regulations.
The report also found that the Board has not periodically
reconciled customer utility deposits per the utility system to accounting
records and cash balances, and promptly investigated any differences. Several
other recommendations regarding the utility system have only been partially
implemented.
While
working with the city in conducting the follow-up work, auditors identified
deleted utility transactions and various concerns related to the handling of
customer utility payments. Additional work related to these transactions and
concerns is planned and will be addressed in a subsequent letter to the Mayor
and the Board of Aldermen.
A complete copy of the follow-up report on Cross Timbers is
available here.
