Computer error to blame for bookkeeping errors found in Sheriff audit

The results of the 2016 financial audit for Sheriff Mike Smith was released Monday, with only minor comments from State Auditor Mike Harmon.

The biggest area of concern involved the sheriff’s accounting. According to the audit findings, “The sheriff’s receipts and disbursements ledgers did not agree to his annual settlement or to the bank records.  The sheriff’s computerized receipts and disbursements ledgers did not agree to the fourth quarter report/annual settlement submitted to the Department for Local Government (DLG) and to the fiscal court.

The sheriff’s ledgers showed receipts of $1,062,844, disbursements of $1,058,474, and excess fees of $4,371. The settlement submitted showed receipts of $1,021,306, disbursements of $1,029,141, with a deficit of $7,835. In addition, neither the computerized ledgers nor annual settlement agreed to the bank records because the bank showed a balance of $31,946 (submitted to the fiscal court on March 15, 2017). The accounting software was not set up properly, which caused tax liabilities to be duplicated and the 2016 receivables not to be posted. The amount of revenues and expenses reported to the regulating bodies and to the public were not accurate. Inaccurate reporting results in lack of government transparency and may lead to further errors.”

The errors, according to Sheriff Smith and corroborated by the response given to the auditor were “Due to a computer glitch with Quick Books Software the profit and loss report did not match bank reconciliation. CPA was consulted to correct the problem with Quick Book set up. All reports now match bank reconciliation and have been submitted to fiscal court.”

Also an area of concern was the segregation of accounting duties for the sheriff’s office. According to the auditor’s report, “The sheriff’s office manager collects payments from customers, prepares bank deposits, issues checks and posts to the receipts and disbursements ledgers. The sheriff’s part-time bookkeeper prepares bank reconciliations, prepares payroll and occasionally collects payments from customers. Front line office personnel prepare their own deposits, but the office manager takes them to the bank. Neither the office manager nor the part-time bookkeeper are authorized check signers, but both are responsible for preparing monthly and quarterly reports. The sheriff or another employee did not provide oversight of any of these activities.”

The auditor’s recommendation is for “The sheriff further separate the duties involved in receiving cash, posting to ledgers, and preparing reports. If this is not feasible due to a limited budget, cross checking procedures should be implemented and documented by the individual performing the procedure.”

According to Sheriff Smith, the money just isn’t available to hire a dedicated bookkeeper. The auditor’s response was to implement controls using existing employees as suggested in their recommendation.

A full copy of the sheriff’s audit may be found online at www.mountainadvocate.com.