STATE OF MISSISSIPPI OFFICE OF THE STATE AUDITOR PHIL BRYANT State Auditor RAMONA HILL, CPA Director, Financial and Compliance Audit Division ED YARBOROUGH, CPA, CIA, CFE, CGFM Director, County Audit Section_part5 pot

37 JEFFERSON COUNTY Schedule 3 Schedule of Purchases Made Noncompetitively From a Sole Source For the Year Ended September 30, 1997 Our test results did not identify any purchases made noncompetitively from a sole source. 38 JEFFERSON COUNTY (This page left blank intentionally) 39 OFFICE OF THE STATE AUDITOR PHIL BRYANT AUDITOR INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH STATE LAWS AND REGULATIONS April 22, 1998 Members of the Board of Supervisors Jefferson County, Mississippi We have audited the primary government financial statements of Jefferson County, Mississippi, as of and for the year ended September 30, 1997, and have issued our report thereon dated April 22, 1998. The auditor's report on the primary government financial statements is qualified because the primary government financial statements do not include the financial data of the county's component units, which should be included in conformity with generally accepted accounting principles. We conducted our audit in accordance with generally accepted auditing standards and the procedures prescribed by the State Auditor, and accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. As required by the state legal compliance audit program prescribed by the Office of the State Auditor, we have also performed procedures to test compliance with certain state laws and regulations. Our procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on the county's compliance with these requirements. Accordingly, we do not express such an opinion. The results of our procedures and our audit of the primary government financial statements disclosed certain immaterial instances of noncompliance with state laws and regulations. Our findings and recommendations and your responses are included in the accompanying Schedule of Findings. This report is intended for the information of management. This is not intended to limit the distribution of this report, which is a matter of public record. PHIL BRYANT RAMONA HILL, CPA State Auditor Director, Financial and Compliance Audit Division 40 JEFFERSON COUNTY (This page left blank intentionally) 41 JEFFERSON COUNTY SCHEDULE OF FINDINGS 42 JEFFERSON COUNTY (This page left blank intentionally) JEFFERSON COUNTY Schedule of Findings For the Year Ended September 30, 1997 43 A. Findings - Independent Auditor's Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of the Primary Government Financial Statements Performed in Accordance With Government Auditing Standards INSTANCES OF NONCOMPLIANCE Board of Supervisors. 97-1. Finding As reported in prior years' audit reports and during the course of the current year, the county made interfund loans. These loans were made when the county experienced negative cash flows in various funds. However, the loans were not repaid when sufficient funds were received by the county. As a result, the county has many large outstanding interfund loans. The Mississippi Code is silent regarding the authority of the county to make these loans. Recommendation Failure of the Board of Supervisors to ensure repayment of these loans is a diversion of legally restricted funds. When an interfund loan is made, the Board of Supervisors should approve and record in the board minutes the reason for the loan, the date the loan will be repaid and the source of funds for the repayment. The Board of Supervisors should ensure repayment of all the old loans by approving and recording a repayment schedule in the board minutes and then complying with the repayment schedule. Board of Supervisors' Response Every effort will be made to repay the delinquent interfund loans. Interfund loans are now being repaid in the year of occurrence. 97-2. Finding Section 19-5-189(2)(b), Miss. Code Ann. (1972), authorizes the Board of Supervisors to levy a special tax not to exceed two mills annually on all of the taxable real property in a fire protection district created after July 1, 1987. As reported in the prior year audit report, the Board of Supervisors is currently levying a tax of four mills on the Union Church Fire Protection District. The tax levy may be increased only after an election is held on the question of raising the tax levy and the proposed increase is approved by a majority of those voting in the District. No election was called by the Board of Supervisors regarding raising this levy. Recommendation The Board of Supervisors should levy only those taxes allowed by law. Board of Supervisors' Response The next budget year will have only two mills for the Union Church Fire District. JEFFERSON COUNTY Schedule of Findings For the Year Ended September 30, 1997 44 97-3. Finding During the current year, the county made a payment of $5,375 for interest due on a tax short-fall note for the Jefferson County School System. The county agreed to pay this note when it was issued several years ago. We know of no authority that would allow the Board of Supervisors to make these payments. Recommendation When the county made an interest payment on this note during fiscal year 1995, the county was advised it had no authority to do so. If the school system experiences a tax short-fall, then the school system should increase its tax millage for the subsequent year in order to repay the tax short-fall note. Board of Supervisors= Response The Board of Supervisors will not pay any cost concerning the loan of the tax short-fall. The school will be notified of the action that needs to be taken. Chancery Clerk. 97-4. Finding Section 27-105-315, Miss. Code Ann. (1972), requires the county to have its uninsured deposits fully collateralized (105%) by securities based upon market value, and the securities are to be held in the name of the county. At September 30, 1997, uninsured deposits of $75,368 were not collateralized at the required 105%. As reported in the prior year audit report, the county=s uninsured deposits were uncollateralized due to the county=s failure to monitor the collateral on deposits properly. Recommendation The Chancery Clerk should monitor more closely the county=s uninsured deposits to ensure they are adequately collateralized in accordance with state law. Chancery Clerk's Response The Chancery Clerk will request a monthly report from the bank and will monitor the collateral securities and will discuss this with the bank president. JEFFERSON COUNTY Schedule of Findings For the Year Ended September 30, 1997 45 MATERIAL WEAKNESS Justice Court Clerk. 97-5. Finding Section 7-7-211, Miss. Code Ann. (1972), gives the Office of the State Auditor the authority to prescribe accounting systems. As reported in prior years' audit reports, we noted the following deviations from the prescribed accounting system contained in the Mississippi County Financial Accounting Manual: a. Cash journals were not properly maintained. The Justice Court Clerk has a computer program in place to generate the cash journals which are not utilized to the fullest extent possible. The program is used only to record receipts and not disbursements. Therefore, a true cash balance is not maintained in the cash journals. b. Bank statements were not reconciled to the cash journals because a true cash balance is not maintained in the journals. c. It appears that the civil cash journal does not reflect all transactions that are processed. If a transaction is not assigned a case number, such as for out-of-county process, the transaction does not appear in the cash journal. The Justice Court Clerk does keep written records that reflect these receipts. Failure of the Justice Court Clerk to comply with the prescribed accounting system could result in undetected errors in the cash journal and improper or incomplete settlements being made to the county. Recommendation The computer program should be used to generate both receipts and disbursements so that a true and correct cash balance can be maintained in the cash journals, and bank statements should be reconciled to the cash journals on a monthly basis. Justice Court Clerk=s Response a. Assistance from other clerks is being utilized. Having the time to do all that=s required is difficult because of staffing and work load. b. Bank statements are being reconciled to the best of my ability in consideration of item a. c. The Delta program, as confirmed with another clerk, does not reflect the out-of-county processes in the journal. Written records are maintained to reflect these receipts. JEFFERSON COUNTY Schedule of Findings For the Year Ended September 30, 1997 46 OTHER REPORTABLE CONDITIONS Chancery Clerk. 97-6. Finding The Chancery Clerk employs one deputy whose payroll is processed with the county=s payroll. The county should receive reimbursement for the payroll, including benefits, before payroll checks are released by the county. The Chancery Clerk has been reimbursing the county for this salary approximately once every six months instead of paying it in advance. This procedure results in an interest free loan to the Chancery Clerk. Recommendation The Chancery Clerk should pay the deputy=s salary to the county in advance of the payroll period. If payment is not made in advance, then the county should not issue a payroll check for the deputy clerk. Chancery Clerk=s Response The Chancery Clerk will pay the deputy clerk=s salary in advance. Service Organization - Delta Computer Systems, Inc. 97-7. Finding Several systems supplied by Delta allow edit and deletion of critical records. Land redemption, homestead exemption along with other systems require an unaltered numbered original to ensure adequate internal control. Delta software packages can be used with or without prenumbered original documents. Recommendation Processes that require original unaltered documents with a sequential preassigned number should be modified to allow voiding but not edit or deletion. Counties using these systems should use prenumbered originals. Service Organization=s Response The application software is incapable of determining what type of paper is being used by the customer, thus incapable of assuring the use of prenumbered forms. The use of prenumbered forms should be directed to the county, not Delta. As you note, Delta supports prenumbered forms. There is no more we can do. If deletion of a critical record is allowed or occurs, the event is recorded in a log file for most releases of the software and will be in full effect upon year 2000 upgrades. . accepted auditing standards and the procedures prescribed by the State Auditor, and accordingly, included such tests of the accounting records and such other auditing procedures as we considered. in the circumstances. As required by the state legal compliance audit program prescribed by the Office of the State Auditor, we have also performed procedures to test compliance with certain state. source. 38 JEFFERSON COUNTY (This page left blank intentionally) 39 OFFICE OF THE STATE AUDITOR PHIL BRYANT AUDITOR INDEPENDENT AUDITOR& apos;S REPORT ON COMPLIANCE WITH STATE LAWS AND REGULATIONS April