PRENTISS COUNTY Notes to Financial Statements For the Year Ended September 30, 1997 (2) Stewardship, Compliance and Accountability_part3 pptx

41 OFFICE OF THE STATE AUDITOR PHIL BRYANT AUDITOR INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH STATE LAWS AND REGULATIONS July 31, 1998 Members of the Board of Supervisors Prentiss County, Mississippi We have audited the general-purpose financial statements of Prentiss County, Mississippi, as of and for the year ended September 30, 1997, and have issued our report thereon dated July 31, 1998. The Independent Auditor=s Report on the general purpose financial statements is qualified because we were unable to satisfy ourselves as to the fair presentation of the General Fixed Assets Account Group, reported on the combined balance sheet at $4,479,997, as of September 30, 1997. 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 general-purpose 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 42 PRENTISS COUNTY (This page left blank intentionally) 43 PRENTISS COUNTY SCHEDULE OF FINDINGS 44 PRENTISS COUNTY (This page left blank intentionally) PRENTISS COUNTY Schedule of Findings For the Year Ended September 30, 1997 45 A. Findings - Independent Auditor's Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of the General-Purpose Financial Statements Performed in Accordance With Government Auditing Standards Inventory Control Clerk. 97-1. Finding As reported in the last fourteen years’ audit reports, fixed asset control procedures were inadequate for maintaining an accurate inventory or adequate subsidiary records documenting the valuation and completeness of general fixed assets. Therefore, the Independent Auditors= Report is qualified because we were unable to satisfy ourselves as to the fair presentation of the General Fixed Assets Account Group, reported on the combined balance sheet at $4,479,997. Failure to establish and maintain an inventory control system for the county=s fixed assets could result in a loss of public property. Recommendation The Inventory Control Clerk should establish adequate control procedures to ascertain the historical cost and/or estimated cost of general fixed assets and to maintain accurate inventory records documenting the valuation and completeness of general fixed assets. Inventory Control Clerk=s Response There must be more cooperation from other department managers in a constant effort if the duties of adding/deleting and maintaining are to be performed in an accurate manner for documentation. Steps to correct this matter have been started but not completed. Service Organization - Delta Computer Systems, Inc. 97-2. Finding Several systems supplied by Delta allow edit and deletion of critical records. Land redemption, purchasing, 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. The counties using these systems should use prenumbered originals. PRENTISS COUNTY Schedule of Findings For the Year Ended September 30, 1997 46 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. B. Finding - Independent Auditor=s Report on Central Purchasing System, Inventory Control System and Purchase Clerk Schedules Inventory Control Clerk. Finding Section 7-7-211, Miss. Code Ann. (1972), gives the Office of the State Auditor the authority to prescribe accounting systems. The Inventory Control Clerk did not maintain an accurate inventory or adequate subsidiary records documenting the valuation and completeness of general fixed assets as prescribed in the Mississippi County Financial Accounting Manual. Failure to establish and maintain an inventory control system for the county=s fixed assets could result in a loss of public property. Recommendation The Inventory Control Clerk should establish adequate control procedures to ascertain the historical and/or estimated cost of general fixed assets and to maintain accurate inventory records documenting the valuation and completeness of general fixed assets. Inventory Control Clerk=s Response There must be more cooperation from other department managers in a constant effort if the duties of adding/deleting and maintaining are to be performed in an accurate manner for documentation. Steps to correct this matter have been started, but not completed. C. Findings - Independent Auditor's Report on Compliance With State Laws and Regulations Chancery Clerk. 1. Finding Section 9-1-43, Miss. Code Ann. (1972), limits the annual compensation of Chancery Clerks to $75,600 after making deductions for employee salaries and related salary expenses, and expenses allowed as deductions by Schedule C of the Internal Revenue Code. A business expense must be both ordinary and necessary to be deductible. During the 1997 calendar year, several expenses were deducted against income that cannot be construed as either ordinary or necessary business expenses. Adequate documentation, such as itemized invoices, was not provided for some expenses claimed as Schedule C deductions. PRENTISS COUNTY Schedule of Findings For the Year Ended September 30, 1997 47 Recommendation The Chancery Clerk should pay $4,913 for the disallowed expenses to the General Fund. Chancery Clerk=s Response Since the date of final payment to the retirement system, it has come to my attention that this is not an allowable expense. Therefore, I am paying $2,622 to the General Fund. In January, 1998, the State Auditor gave all clerks a more precise list of allowable expenses. Although not all inclusive, it should help in identifying allowable expenses in the future. Auditor=s Note The Chancery Clerk paid $2,622 to the General Fund on August 10, 1998, as evidenced by receive warrant number 3754. The Chancery Clerk paid an additional $2,291 to the General Fund on August 13, 1998, as evidenced by receive warrant number 3767. Tax Collector. 2. Finding Section 27-49-1, Miss. Code Ann. (1972), requires the Tax Collector to present to the Board of Supervisors at its meeting on the first Monday of October in each year, a report of all insolvent and delinquent taxpayers in the county, with the amount due from each. The required report was not presented to the board. Recommendation The Tax Collector should present to the Board of Supervisors the report of insolvent and delinquent taxpayers. Tax Collector=s Response I agree and understand this problem and will correct it. PRENTISS COUNTY Schedule of Findings For the Year Ended September 30, 1997 48 Circuit Clerk. 3. Finding Section 9-1-43, Miss. Code Ann. (1972), gives the Office of the State Auditor the authority to prescribe a uniform accounting method to account for the fees earned by the Circuit Clerk. The following deviations from the prescribed accounting system were noted in the Circuit Clerk’s Office: a. The fee journal was not properly prepared in that no withdrawals were listed and no expenses were recorded in the fee journal even though some had been incurred. b. The Circuit Clerk’s report that was filed with the Office of the State Auditor was not filled out correctly in that disbursements were reported that had nothing to do with the Circuit Clerk’s Office. They were business deductions of other business endeavors of the Circuit Clerk. c. The Circuit Clerk was not reconciling the bank statements to the fee journal. Recommendation The Circuit Clerk should prepare his fee journal in such a manner that it meets all the prescribed criteria. He should properly reconcile the monthly bank statements and properly prepare the annual report that is sent to the Office of the State Auditor. Circuit Clerk’s Response We will do whatever it takes to do the journal right. . audited the general-purpose financial statements of Prentiss County, Mississippi, as of and for the year ended September 30, 1997, and have issued our report thereon dated July 31, 1998. The Independent. intentionally) PRENTISS COUNTY Schedule of Findings For the Year Ended September 30, 1997 45 A. Findings - Independent Auditor's Report on Compliance and on Internal Control Over Financial Reporting Based. provided for some expenses claimed as Schedule C deductions. PRENTISS COUNTY Schedule of Findings For the Year Ended September 30, 1997 47 Recommendation The Chancery Clerk should pay $4,913 for the