County Receives Failing Grade In Audit Of Budgets And Transfers

     The Office of Missouri State Auditor Nicole Galloway issued a failing grade to Jackson County following an audit concerning County Budgets and Transfers. The audit was requested by Jackson County Executive Frank White, Jr. in January 2018.
     The audit of County budgets and transfers found the county frequently underestimated fund balances, underestimated revenues and overestimated spending. As a result, county funds have a higher balance than expected and taxpayers do not have a clear understanding of the county's finances.                 
     The poor estimates of beginning and ending fund balances resulted in undesignated fund balances. Instead of following the budget process established by state law, which would require public hearings, the audit found the county legislature improperly transferred these undesignated fund balances. During 2017 and 2018, the county legislature authorized more than $3 million in transfers for use throughout the county. In order to ensure all spending is transparent, the audit recommends the legislature discontinue authorizing these transfers of undesignated fund balances.
     The audit also reviewed the county executive office's use of administrative transfers, which are permitted as long as they do not exceed $10,000. Between 2016 and 2018, the audit found these administrative transfers totaled $10 million and the majority of those that were more closely examined by auditors were completed without proper approval or did not have sufficient documentation or explanation.
     The audit also found that between 2016 and 2018, the county executive approved $3 million in multiple-object-code administrative transfers. In these cases, individual transfers were under the $10,000 threshold, but went towards a single purchase that exceeded $10,000. In these cases, the purchase may have otherwise required legislative approval.
     In 2019, the county consolidated departments into a single fund, which officials say will eliminate the need for similar transfers. The audit recommended county officials review and update the county code to ensure the necessity of administrative transfers.  
    In a November 30th press release, County Executive Frank White, Jr., shared his thoughts on the report.
     “Upon Auditor Galloway’s acceptance of the audit request on April 11, 2018, my administration has fully participated in this process to help her staff complete their scope of work, which included more than one audit report. The third report released today focuses on Jackson County’s Budgets and Transfers,” White said.  
     “While we may disagree with some of the statements or findings, we will continue to work with elected leaders as we review the report to determine if additional changes are necessary. I would like to thank State Auditor Nicole Galloway and her staff, whose hard work will help us in continuing to operate effectively with the utmost transparency and efficiency.”