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Audit Questions County Practices
Rarely does a county audit raise any eyebrows in the public, but there has been much discussion recently around Edina about this year’s Knox County Audit, which was released in July by State Auditor Susan Montee.
Audit findings are summarized on the first page on what Montee refers to as the “Yellow Sheet”. The following comes from that page:
“The following findings were included in our audit report of Knox County.
The financial conditions of the General Revenue Fund and the Road and Bridge Fund have declined in the past several years and are anticipated to decline even further. While receipts have remained approximately the same, disbursements have increased steadily over the last several years. The County Commission indicated it is aware of the concern, but has not developed a formal plan to address the county’s financial condition.
The county has not adopted formal policies and procedures over the sale of rock and culverts to the public and other governmental entities. As a result, rock requests and sales of culverts are not handled consistently and are not adequately documented. A bill of sale is not always prepared for each sale and sales tax is not collected on culvert sales. The County Clerk does not compare rock purchase statements to invoices and delivery tickets received by the road and bridge department which show actual rock received.
Controls over property tax additions and abatements are not adequate. No review and approval of change requests and/or court orders submitted by the County Assessor and comparisons to changes actually made to the property tax system by the County Collector are performed. In addition, the County Clerk does not prepare or verify the accuracy of the delinquent tax books.
The county does not have adequate procedures to account for fuel and mileage for some county vehicles. The road and bridge department does not maintain any type of fuel logs in the vehicles or equipment, nor does it maintain fuel inventory records or logs of fuel dispensed at the county’s bulk fuel tanks. Mileage logs that include the purpose and destination of each trip and beginning and ending odometer readings are not maintained. The county does not report taxable benefits associated with county vehicles used for commuting purposes. In addition, the county is reimbursing one official for commuter mileage incurred on his personal vehicle and not reporting it is a taxable benefit.
The County Commission has not developed a written policy for the use of county cellular telephones. In addition, the county has allowed some individuals to include their personal cellular telephones on the county’s plan and county funds were used to pay for one employee’s personal cellular telephone bill for two months reviewed.
Actual disbursements exceeded budgeted amounts for several county funds and the county has not disbursed monies from the Children’s Trust Fund since the fund was created in 1990. The county’s accounts payable process does not provide adequate controls to ensure goods and services have been received prior to payment. In addition, the county paid monies to various not-for-profit organizations without entering into written contracts or requiring documentation of how the monies were spent by the organizations.
Other findings in the audit report address the apportionment of railroad and utility taxes; capital asset records and procedures; payroll policies and procedures; computer controls; accounting controls and procedures in the Prosecuting Attorney’s office, the Sheriff’s office, and the County Clerk’s office; and the Circuit Clerk’s accrued costs procedures”
One particular area of discussion has been the cellular telephone usage of county employees. The following findings are quoted from the audit:
Cellular Telephone Policies and Procedures
The County Commission has not developed a written policy for the use of county cellular telephones. In addition, the county has allowed some individuals to include their personal cellular telephones on the county’s plan and county funds were used to pay for one official’s personal cellular telephone bill for the 2 months we reviewed. The County Road Supervisor, County Assessor, and various Sheriff’s office employees utilize county cellular telephones. The county spent approximately $8,800 and $6,600 for cellular telephone use in 2007 and 2006, respectively.
A. The County Commission has not developed a written policy regarding cellular telephone use. A written policy regarding county cellular telephone use is necessary to prevent misuse of county assets and ensure there is no misunderstanding within the county regarding county cellular telephone use. This policy should provide criteria for determining which employees should be assigned a cellular telephone and proper use of the telephones, including restrictions on personal use. In addition, the policy should establish required billing review procedures.
B. Personal cellular telephones are included in the county’s cellular telephone plan. In past years, the county had numerous personal cellular telephones on its plan. Many of these telephones were canceled over the years. However, as of October 2008, out of the 11 telephones on the county’s plan, 5 telephones were for county business, 4 telephones were for the County Clerk and a road and bridge department employee and their family members’ personal use, and 2 telephones were for an individual who used to rent office space from the county approximately 8 years ago. When the monthly invoices are received at the County Clerk’s office, the invoices relating to the personal cellular telephones are given to the three respective individuals to pay their personal bills directly to the cellular telephone company. Copies of these personal invoices are not maintained at the courthouse. The County Clerk then prepares a voucher for the County Commission to approve the invoices related to the five county-use telephones. We noted the following concerns during our review of December 2006 and January 2007 cellular telephone invoices:
• The backup documentation did not agree to the amount of the payment vouchers. The amounts paid were less than the amounts in the backup documentation by approximately $1,200 and $1,500 in January 2007 and December 2006, respectively. However, the County Clerk could not explain why the amounts did not agree.
• The county paid a total of $503 in personal cellular telephone bills for the County Clerk for the months reviewed. When we brought these payments to the County Clerk’s attention in December 2008, she stated it was a mistake and she would pay the county back. However, as of April 2009, this situation had not been resolved. The county should discontinue the practice of allowing individuals to obtain personal cellular telephones through the county’s plan. Since the county is state sales tax exempt, these individuals are allowed to obtain cellular telephone service without paying the required sales tax and if any of these individuals did not pay their respective bills, the county would be liable for those costs. The county should also review other months’ invoices to determine if any additional county funds were used to pay for personal cellular telephone costs and seek reimbursement if any instances are noted.
WE RECOMMEND the County Commission:
A. Develop a written policy regarding cellular telephone use and establish billing statement review procedures.
B. . Discontinue the practice of allowing individuals to have their personal cellular telephones on the county’s plan. The County Commission should also ensure the amounts listed on the payment vouchers agree to the backup documentation. In addition, the County Commission should investigate cellular telephone bills for any additional payments made with county funds for employee’s personal cellular telephone bills and seek reimbursement as necessary.
AUDITEE’S RESPONSE The County Commission provided the following response:
A We are planning to include a cellular telephone policy in the new personnel policy manual, which we are in the process of revising.
B. We took the personal cellular telephones off of the county’s plan in December 2008. In the future, we will ensure the backup documentation agrees to the payment voucher. We will also review other months’ invoices to ensure county funds only paid for business-related calls.
The County Clerk provided the following response:
B. The payment of my personal bill with county funds was not intentionally done. It happened during a transition time. I will reimburse the county by the end of 2009.
The entire audit is available on our website, www.nemonews.net.