Lack of oversight and poor procedures allowed suspicious activity to continue undetected
JEFFERSON CITY, MO – Missouri State Auditor Nicole Galloway today released a citizen-requested audit that shows more than $42,000 missing and unaccounted for in the city of Winona, located in Shannon County. Lack of oversight and poor accounting procedures allowed the suspicious activity to go undetected for at least two years.
“Any amount of missing money is deeply concerning and represents a violation of the public’s trust,” Auditor Galloway said. “It’s disappointing that the financial processes of the city were so poor that this activity was able to occur and continue for a significant period of time.”
Auditors initially noticed financial discrepancies when reviewing money on hand at city hall and determined over $600 in cash was missing. Additional investigation went back as far as January 2015 and revealed at least $34,000 in cash that was received and documented, but not deposited. In order to prevent detection, unrecorded check payments would be substituted to cover up the missing cash. Additionally, more than $7,000 in utility check payments were recorded in the system, but not deposited.
Shortly after missing money was detected by auditors, two large questionable cash deposits totaling $7,700 were made and payments were posted to mostly inactive city utility accounts. According to city officials, the accounts may be of friends and family of the city clerk.
During the course of the audit, the State Auditor’s Office notified the Missouri State Highway Patrol of the potential theft. Highway Patrol investigators questioned both the city clerk and utility clerk. The city’s Board of Aldermen then terminated the city clerk’s employment.
The audit found lack of oversight by the board and poor procedures for documenting cash, issuing receipts, and depositing money allowed the improper activity to continue undetected. Accurate record keeping was also made more difficult because the city maintained 15 separate bank accounts. Other practices that raised concerns included a number of improperly recorded payments, the practice of accepting third-party checks for utility payments, and cashing $168,000 in checks for employees, family members and customers.
In addition to lack of oversight and cash handling problems, the audit found significant improvements were needed in nearly all areas of the city operations including payroll, disbursements, budgeting and financial reporting. Findings also related to Park Board procedures and safeguards over electronic data and city property. The report also found the city was not properly tracking and spending restricted funds, and recommended conducting a cost study to ensure utility rates are set at appropriate levels.
Citizens requested the audit, which received an overall rating of poor, through the petition process. The complete report on the City of Winona is HERE.
SOURCE: news provided by AUDITOR.MO.GOV