Holt County financial procedures critiqued by state auditors

The Nebraska auditor of public accounts released results Holt County's annual audit last week.

The report covers July 2018 to June 2019, and includes numerous areas of concern for internal control that were listed in a letter sent to the county board of supervisors Sept. 10.

The report is a matter of public record and is posted on the APA's website.

Deann Haeffner, APA assistant deputy auditor, noted in the letter that the report is "critical in nature" as it addresses areas noted for improvement and does not include observations on any strong features of the county. Auditors made corrective recommendations regarding each issue listed. Haeffner indicated where no response is included, the county officials declined to respond.

Holt County Overall

*For the county overall, the auditors found the offices of the county each lacked a segregation of duties, thus one staff member could handle all aspects of processing a transaction from beginning to end, increasing risk of errors or irregularities.

The county has discussed the finding but must consider the cost of adequate segregation of duties when determining use of tax money.

County Supervisors

*An account held by a third- party administrator of health insurance claims, contained a balance of $442,003 on June 30.

Meritain Health was authorized to withdraw from the county fund without prior approval of the board of supervisors. The practice is permitted by statute, provided a contract meets requirements of the Interlocal Cooperation Act. Funds paid to Meritain did not meet requirements and should be controlled by a county official in a county bank account or an authorized petty cash fund. Amounts deposited to the account were subjective and not based on amounts of claims paid, nor to keep an established reserve balance.

*A listing of delinquent personal property taxes was not reviewed prior to payment of claims. Auditors found a claim totaling $287,533 was paid to a vendor who owed $1,109 in delinquent taxes.

*Two claims were approved for the purchase of flowers, $100 by the extension office and $45 by the probation office, a violation of the Local Government Miscellaneous Expenditure Act.

*Two claims approved by the board did not follow the state bidding requirements. The board appropriately bid a Stuart North Overlay project and awarded the contract to Werner Construction in April 2017, subsequently approving a change order totaling $1,070,160, to add a second project to the bid, the Ewing South Overlay project. The change order was not an addition to the original project, rather it was for a separate project more than 45 miles distant; the county road superintendent entered into a contract with North Construction LLC for a project related to flooding, which was not approved by the board, nor were bidding requirements waived as required by state statute.

Awarding contracts for purchases or services estimated to cost $50,000 or more, without bids being received or properly waived is not in compliance with statute. The board was advised to ensure all contracts are awarded in compliance with state bidding requirements.

County Clerk

*Expenditures paid out of five functions of the General Fund were not contained in the adopted county budget. The county clerk coded expenditures previously budgeted in the miscellaneous function of the General Fund to five separate General Fund functions, causing the expenditures in all five functions to exceed the adopted budget, including: Personnel costs, $1,915,661; counsel and jury costs, $105,484; economic development, $39,555; district probation office, $41,963; and highway department, $123,040.

*Funds of $1,894 collected by the county clerk's office for plat maps and Nebraska Game and Parks permit fees were not remitted to the county treasurer, instead they were used for the following purchases: $1,800 for plat maps, $4, interest on unemployment; and $90, clerk training.

*Receipting discrepancies were found related to register of deeds reconciliation procedures. Reconciliation completed by auditors noted: Three separate discrepancies recorded prior to July 2018 resulted in a $613 shortage; 20 separate discrepancies during the past year resulted in a $251 shortage; and six separate instances of disbursements not being recorded, resulting in overage of $38,150.

The county official responded, "The register of deeds worksheet has been corrected and is balanced with the checkbook."

County Treasurer

*The county's Imprest Account was maintained by the county treasurer, instead of the county clerk, as outlined in guidelines issued by the APA. On June 30, the account held $34,720 more than approved, due to the treasurer "consistently transferring funds exceeding the amount of claims."

According to the Imprest Guidelines, "The county treasurer issues one check for the total of the warrants from the various funds to the ...County Imprest Account." The bank statement should be received and reconciled monthly by the clerk. Without such procedures, the county is not in compliance with state statute."

*Recorded transfers in the county clerk's records did not agree with those recorded by the county treasurer: The treasurer listed transfers out of the General Fund of $2.1 million, however, the clerk recorded the same transfers at $2.6 million; transfers out of the Courthouse Bond Fund, totaling $30,756, and out of the ADA Fund totaling $242, were not recorded by the clerk.

*Two fund transfers were completed without specific board approval. An authorization form for a $500,000 transfer was not signed by the board and a transfer of $30,998 had no authorization form.

*Two of three 5% in-lieu distributions tested were not calculated correctly due to exclusion of additional school district funds and inclusion of O'Neill Airport Authority.

*The 2018 distribution of property taxes was not calculated correctly for two subdivisions, due to the inclusion of the airport authority as a sub-fund of the City of O'Neill, resulting in the city being underpaid by $705 in April 2018, and paid to the airport authority.

Clerk of the District Court

*Fines totaling $9,917, collected by the district court, were credited to the General Fund, not to the Fines and Licenses Fund, leading to fines not being remitted to the County School Fund, as required by state statute.

*A review of the district court trust account revealed issues with case balances, including: Balances totaling $225 remained in two cases that had been previously mandated; $34 remained in a case that was dismissed in November 2018; and for one case tested, totaling $100, a rebate was received in October 2007, but balance was still held.

*The clerk of the district court received $1,033 in passport fees that was not remitted to the treasurer, instead funds were used for postage.

County Sheriff

*Fees earned by the sheriff were not remitted to the county treasurer; fees for services provided to the county attorney and district court, totaling $1,663, were not claimed nor remitted to the treasurer; sales tax collected, totaling $995, had not been remitted to the treasurer for inclusion in payment to the state, $944 of it was determined to be prior to July 2018, actual date could not be determined; and commissions on commissary items, totaling $7,365, were not remitted to the treasurer, $4,731 of the total was received prior to July 2018, but actual date was undetermined.

*Issues with accounting procedures included: A book balance and list of outstanding checks was not maintained for four of five bank accounts; accurate monthly bank reconciliations were not performed on any of the accounts, a $185 unknown long was found in the account that included a book balance; monthly reconciliation was not performed, resulting in longs in three of the accounts, $6,038, $2,204 and $5,011; and a surprise cash count found 21 checks received, totaling $1,077, not restrictively endorsed.

*Two items were noted concerning petty cash funds, including: $250 maintained in the sheriff's office was not reconciled to the authorized amount, resulting in a shortage of $7; in a bank account used as an unauthorized petty cash fund, without county board approval, auditors found $387 of $647 in postage and training expense had not been reimbursed by the county.

*Fees collected for fingerprints, work release, prisoner boarding and breath tests, had no receipts on file to support $4,056 in deposits; and handgun and title inspection fees, totaling $7,190, were logged at the end of the month instead of when the funds were received.

*Breath test fees of $582 were not remitted to the treasurer, instead the funds were used to pay for Brethalyzer equipment repairs; $8,727 in receipts for commissary commissions were not remitted to the treasurer, instead $6,300 was used to purchase phone cards, $1,036 for a washing machine, $429 for books, coffee maker and coloring books, $226 for newspaper and magazine subscriptions, $220 for monthly cable subscription, $256 for Bibles and other media, $210 for postage and $50 for DNA samples.

County Attorney

*The county attorney collected restitution and diversion funds, with no receipts issued to support $9,153 in deposits.

*Diversion fees totaling $1,356 were not remitted to the county treasurer, instead they were used for purchases, including $676 for medical supplies, $280 for Narcan and $400 for sheriff's department investigations.

*Petty cash in the amount of !,000, maintained in a bank account was not reconciled to the authorized amount, resulting in an overage of $240; Six deposits into the account, totaling $537, were not reimbursements from the county, office staff could not provide information regarding the payor; an $800 entry did not have supporting documentation attached or on file.

Veterans Service Officer

*The veteran's service office had no receipts on file to support $1,020 deposited.