37 OFFICE OF THE STATE AUDITOR PHIL BRYANT AUDITOR INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH STATE LAWS AND REGULATIONS October 1, 1998 Members of the Board of Supervisors Perry County, Mississippi We have audited the primary government financial statements of Perry County, Mississippi, as of and for the year ended September 30, 1997, and have issued our report thereon dated October 1, 1998. The auditor's report on the primary government financial statements is modified to reflect that the primary government financial statements do not include the financial data of the county's component units. 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 38 PERRY COUNTY (This page left blank intentionally) 39 PERRY COUNTY SCHEDULE OF FINDINGS 40 PERRY COUNTY (This page left blank intentionally) PERRY COUNTY Schedule of Findings For the Year Ended September 30, 1997 41 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 Board of Supervisors. 97-1. Finding Sections 66 and 96 of the Mississippi State Constitution prohibit payment before services are rendered. During our audit field work, we discovered that Perry County had paid the county engineer on a resurfacing contract prior to completion of required contract milestones. Recommendation The Board of Supervisors should recover from the county engineer any monies paid in advance of work actually completed. Payments on the contract should be made in the manner specified by the contract. Board of Supervisors’ Response After January 8, 1999, no advance payments on any contracts with the county engineer will be paid, and as soon as certain plans are approved by the state of Mississippi, the state will reimburse the county to cover any advances that have been made. Auditor’s Note This matter is currently being investigated by the Investigative Division of the Office of the State Auditor. Chancery Clerk. 97-2. Finding Section 37-19-37, Miss. Code Ann. (1972), specifies the percentage of oil, gas and timber severance taxes received from the state that is to be settled to the schools. The section states that the county is to settle 50% of all severance tax received to the schools. For fiscal year beginning July 1, 1995 and each subsequent year thereafter, the percentage the county is required to disburse to the schools decreases by 5%. The 5% per year reduction will continue until fiscal year 2004-2005, at which point the percentage will be zero. Perry County was not allocating severance tax monies between county funds and the school system as required. As of June 30, 1998, the mis-allocation resulted in an over settlement of funds to the county schools of $15,921.85. Recommendation The Chancery Clerk should either collect the amount of over settled funds or withhold this amount from future settlements to the schools. All future settlements should be in the percentages specified by the aforementioned code section. PERRY COUNTY Schedule of Findings For the Year Ended September 30, 1997 42 Chancery Clerk’s Response The problem is in the process of being corrected. Justice Court Clerk. 97-3. Finding Section 7-7-211, Miss. Code Ann. (1972), gives the Office of the State Auditor the authority to prescribe accounting systems. The Justice Court Clerk did not maintain a control account for all accounts receivable and partial payments. Recommendation The Justice Court Clerk should maintain an accurate accounting of accounts receivable, and the computer system should be corrected to list all accounts receivable amounts. Justice Court Clerk’s Response This matter is being addressed, and we hope to have the matter cleared up within the year. Inventory Control Clerk. 97-4. Finding Internal control weaknesses were noted in the county’s inventory system. Items of a significant value were not on inventory. Items were sold or traded in by departments without the Inventory Control Clerk being informed. Some items were on inventory at incorrect values. Recommendation Procedures should be implemented to ensure the Inventory Control Clerk is aware of any item sold or traded in. Additional procedures should be implemented to ensure items are recorded at a true cost or value. All items required to be included on the county inventory should be added at acquisition date. The county should add the county lake and all lake buildings and improvements to inventory. Inventory Control Clerk’s Response As Inventory Control Clerk, I am requesting the Board of Supervisors to implement procedures to have any documentation concerning fixed assets flow through my office. The county inventory is being reviewed to ensure that all items are recorded at a true cost or value. The county lake, with buildings and improvements, are being added to county inventory. PERRY COUNTY Schedule of Findings For the Year Ended September 30, 1997 43 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. Internal control weaknesses were noted in the county’s inventory system. Items of a significant value were not on inventory. Items were sold or traded in by departments without the Inventory Control Clerk being informed. Some items were on inventory at incorrect values. Recommendation Procedures should be implemented to ensure the Inventory Control Clerk is aware of any item sold or traded in. Additional procedures should be implemented to ensure items are recorded at a true cost or value. All items required to be included on the county inventory should be added at acquisition date. The county should add the county lake and all lake buildings and improvements to inventory. Inventory Control Clerk’s Response As Inventory Control Clerk, I am requesting the Board of Supervisors to implement procedures to have any documentation concerning fixed assets flow through my office. The county inventory is being reviewed to ensure that all items are recorded at a true cost or value. The county lake, with buildings and improvements, are being added to county inventory. C. Findings – Independent Auditor’s Report on Compliance With State Laws and Regulations Board of Supervisors. 1. Finding Section 31-5-51, Miss. Code Ann. (1972), requires any person entering into a formal contract with any county for the construction, alteration or repair of any public building or public work, before entering into such contract, to furnish to such public body performance and payment bonds with good and sufficient surety. Perry County did not require separate performance and payment bonds on contracts as required by this statute. Recommendation The Board of Supervisors should require both performance and payment bonds of sufficient amounts before entering into any contract as required by Section 31-5-51, Miss. Code Ann. (1972). Board of Supervisors’ Response We will comply with Section 31-5-51, Miss. Code Ann. (1972), on all future contracts. PERRY COUNTY Schedule of Findings For the Year Ended September 30, 1997 44 2. Finding Perry County, as lessor, was not following and did not require Sportsman Lake Group, as lessee, to follow the lease agreement on Sportsman Lake. Recommendation As required by the lease terms, the county should require Sportsman Lake Group to maintain the lake property, Sportsman Lake Group should provide yearly financial statements to the Board of Supervisors, and the Board of Supervisors should approve user fees for use of the lake. Board of Supervisors’ Response We will review this lease agreement and will adhere to all terms of the lease in the future. Circuit Clerk. 3. Finding Section 25-7-13(2)(m), Miss. Code Ann. (1972), allows the Circuit Clerk to be paid by the county $30 per day for herself and each necessary deputy allowed by the court for each day’s attendance upon the circuit court term. The Circuit Clerk claims herself and two deputies (for a total of $90) each day. During field audit work, we observed only one deputy was working for the Circuit Clerk. The county payroll department also confirmed only one deputy on payroll during fiscal year 1997. The Circuit Clerk was overpaid if she claimed an extra deputy that was not actually working during court term. Recommendation The Circuit Clerk should only receive the $30 attendance fee for herself and necessary deputies during a regularly scheduled or vacation court term. Circuit Clerk’s Response On occasion, members of my family worked during court time which, in my opinion, satisfied the requirement of the statute in question. Auditor’s Note This matter is currently being investigated by the Investigation Division of the Office of the State Auditor. 4. Finding Section 25-7-13, Miss. Code Ann. (1972), limits reimbursement for state fail cases to $400 each fiscal year. The Circuit Clerk was reimbursed $600 during the 1997 fiscal year, resulting in an overpayment of $200. PERRY COUNTY Schedule of Findings For the Year Ended September 30, 1997 45 Recommendation The Circuit Clerk should reimburse the county the $200 overpayment or reduce the amount claimed in the current fiscal year accordingly. The Circuit Clerk should request only the amount allowed by the above code section in future years. Circuit Clerk’s Response When reimbursement was due to be paid again, I did not claim $200 which corrected the overpayment. I will comply with the law in the future. 5. Finding The Circuit Clerk entered into an agreement with the Board of Supervisors to pay a portion of her deputy’s salary. During the fiscal year, the Circuit Clerk failed to reimburse the county the required portion for one month’s salary. Recommendation The Circuit Clerk should reimburse the agreed upon percentage of her deputy’s salary actually paid for the month in question. Circuit Clerk’s Response The deputy clerk in question took unpaid vacation time which relieved me of this responsibility. The amount paid by Perry County for the month in question was less that the agreed amount to be paid each month. . 37 OFFICE OF THE STATE AUDITOR PHIL BRYANT AUDITOR INDEPENDENT AUDITOR& apos;S REPORT ON COMPLIANCE WITH STATE LAWS AND REGULATIONS October 1, 1998 Members of the Board of Supervisors Perry. investigated by the Investigative Division of the Office of the State Auditor. Chancery Clerk. 97-2. Finding Section 37-19-37, Miss. Code Ann. (1972), specifies the percentage of oil, gas and. 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.