03/09/2022 - Jefferson City, Mo.
Auditor Galloway today released
her findings from an audit of the city of Cross Timbers in Hickory County.
Residents of Cross Timbers, a small town of fewer than 120 residents in west
central Missouri, initiated the audit through the petition process. The audit
released today, which gives a rating of "poor" - the lowest possible
rating - found a city in poor financial condition and tens of thousands of
dollars misappropriated by the former City Clerk. The State Auditor's Office
worked with the Hickory County Prosecuting Attorney and the Missouri State
Highway Patrol to complete the forensic audit of missing and misappropriated
money.
"I
encourage city leaders to work with law enforcement regarding criminal
prosecution and restitution of the missing and misappropriated money,"
Auditor Galloway said. "It is also essential that the Board of Aldermen
address the poor financial condition of the city in both the immediate and
long-term through better oversight and planning."
From sometime in 2017 until
July of 2020, January "Nicki" Clark performed part-time city clerk
duties and part-time water/sewer utility maintenance duties. Auditors found
that at least $44,452 was misappropriated from the city by the City
Clerk during her time of employment with the city. This includes $21,474 in
payments to the city never deposited by the clerk, improper adjustments to
utility payments, including adjustments to her own utility account, and
overpayments to herself for hours worked that could not be established. In
cooperation with law enforcement, the State Auditor's Office obtained the clerk's
personal bank records to establish that there were cash deposits into her personal
bank account of amounts similar to or typically greater than the amount of
missing city receipts.
Additionally, auditors found that the clerk overcompensated
herself by more than $6,000 during her time with the city. Auditors could not
establish records supporting hours worked and pay beyond the 48 hours and $900
per month established by the Board of Aldermen. Additionally, from October 1,
2017, through July 31, 2020, improperly recorded utility payments totaling
$1,973 and improper adjustments totaling $234 were applied to the utility
account of the City Clerk. In addition, the City Clerk did not properly bill
herself for $545 of utility services. In sworn testimony, the clerk indicated
she did not know she was not supposed to get free utility service.
The audit also found that a former Alderman received free
utility services from the city from 2015 until 2019, valued at $4,036. In a
recorded interview, the former alderman indicated he helped the former
Maintenance Supervisor in exchange for free water and sewer services. However,
this arrangement was not approved by the Board, was not documented or approved
by city ordinance, and appears to be in violation of statutory prohibitions on
conflicts of interest.
City finances are in poor financial condition, and
the Board had not adequately monitored the city's financial condition. As a
result, disbursements exceeded receipts in 2019 and 2018 causing cash balances
to decrease. The cash flow problems resulted in the city not paying bills
timely.
Auditors said that the Board needs to develop a plan
to pay existing obligations and fund future projects, reduce spending where
possible, evaluate controls and management practices to ensure efficient use of
resources, monitor detailed financial data, and prepare and closely monitor
budgets. The former City Clerk did not always provide the Board with financial
records, so as to conceal her misappropriations and the city's financial
condition. The Board indicated it relied on the City Clerk to communicate city
finances, and was not aware it should monitor the city's financial condition.
A complete copy of the audit is available here.
