State audit of Dunklin County Sewer District finds $160K misused, missing
DUNKLIN COUNTY, Mo. (KBSI) – An audit of the Dunklin County Sewer District found $160,000 is missing or was misused.
The former board president and his wife were in charge of the financial accounting functions.
The office of Missouri State Auditor Scott Fitzpatrick recently released the findings of the audit of the sewer district.
The former board president Korey Adams was appointed on August 27, 2007. He served through March 5, 2021. The former bookkeeper was his wife, Jennifer Adams. She began employment with the district in August 2008 and served until March 5, 2021.
They were primarily responsible for the financial accounting functions and record of the district before March 5, 2021.
The board president hired and paid his wife to serve as the bookkeeper from August 2008 to March 5, 2021. From March 2020 to March 2021, 14 checks issued to the bookkeeper totaling $23,743 that were signed by the board president.
In March 2021, the State Auditor’s Office (SAO) Whistleblower Hotline received concerns about the operations and finances of the former Dunklin County Sewer District Board from officials at the City of Malden.
On April 19, 2021, the City of Malden, acting in its capacity as governing body of the sewer district pursuant to the Circuit Court’s receivership order, adopted a resolution formally requesting and authorizing an audit by the SAO, and the SAO subsequently agreed to conduct the audit under Chapter 29, RSMo. The SAO began the audit in March 2022.
The SAO issued subpoenas to the board president, bookkeeper, three board members, and a former maintenance employee to compel them to provide testimony and produce records and documents related to their testimonies.
From January 1, 2017, through March 5, 2021, money and sewer services totaling at least $62,579 were missing and/or misappropriated from the district and an estimated additional $98,096 was not deposited and is likely missing from the district, according to Auditor Fitzpatrick.
Payroll overpayments totaling $54,049 were made to the bookkeeper; unsupported payments totaling $4,567 were made to the board president and the bookkeeper. Sewer services totaling $3,063 were not paid by the board president and bookkeeper. Estimated and actual sewer security deposits and sewer receipts totaling $98,996 were not deposited by the bookkeeper, according to Auditor Fitzpatrick’s office.
At least two vacant board positions were not filled for more than four years. That left the citizens of the district without adequate leadership, representation, and accountability, according to a report by Missouri State Auditor Scott Fitzpatrick.
The existing board members did not establish adequate oversight over district operations. Only one board member’s signature was required on district checks. Board members who signed checks from January 2017 to February 2020, indicated in sworn testimony they signed blank checks in advance and signed other checks without reviewing the related invoices. The Board President signed most checks from March 2020 until March 2021, including checks issued to himself and his wife. The board also did not obtain annual audits as required by state law and United States Department of Agriculture (USDA) bond agreements, and did not obtain bond coverage for district officials responsible for receipts and
disbursements.
The bookkeeper did not ensure payroll tax forms were filed and payroll taxes were remitted timely to the IRS. So, the sewer district was assessed $756 in penalties, $287 in interest, and $1,881 in additional taxes.
As of July 8, 2022, at least $10,252 was still due to the IRS and significant interest and penalties were still accruing.
Also, the bookkeeper did not prepare timesheets or documentation of work performed to support payments made. The district did not maintain/retain personnel policies and personnel files. The bookkeeper issued herself pay advances on numerous occasions which were in violation of the Missouri Constitution, according to the report by Auditor Fitzpatrick.
The district’s procedures for receipting, recording, and depositing money were poor. The bookkeeper did not prepare bank reconciliations for any of the district’s bank accounts, maintain a checkbook register or book balances, always issue checks in numerical order, or prepare a list of bills or monthly financial reports for board review.
The board and the bookkeeper failed to monitor the sewer district’s cash balances and incurred almost $1,700 in overdraft and minimum balance fees, according to the report.
The bookkeeper also did not maintain a listing of refundable customer security deposits held in the deposit account and made $10,200 of improper transfers from these restricted funds.
The auditor’s office estimates a shortage of $21,987 in customer security deposits in that account.
The bookkeeper and board also did not make required bond payments, did not fund bond accounts in accordance with bond agreements, and did not maintain/retain district records.
Tap here to read the Citizens Summary of the audit of the Dunklin County Sewer District.
Tap here to read the full report on the Dunklin County Sewer District.
