Kimberling City audit reveals missing $32,000

The Missouri State Auditor’s office recently looked into the books for Kimberling City, and the findings were not good news for the city.
Kimberling City recently fired its accounting clerk after the auditor discovered at least $32,000 missing from city coffers. The money, according to State Auditor Claire McCaskill’s report, was “apparently misappropriated” from cash and check payments for sewer bills, sewer deposits and other city fees.
Tangee Lamer, city accounting clerk at the time, was placed on administrative leave Oct. 20, 2004, and was terminated from employment Nov. 1, according to the audit report. No arrest has been made and no charges have been filed.
Receipts of cash totaling at least $32,771 were collected by the city from May 2003 to October 2004, but weren’t deposited, according to the audit report. In most instances, credit adjustments rather than payments were posted to the city’s sewer accounts receivable records to conceal the shortage. In that 18-month period, the report said, monthly credit adjustments increased five times more than those recorded in previous months and totaled about $40,913.
Kimberling City Mayor Gary Conway said the city is working with the Missouri State Highway Patrol and the Stone County prosecutor to try to recover the money.
“We’ve provided them with anything they’ve asked for from our side, and we will be pursuing prosecution,” he said. “The investigation is ongoing. We hope to be pursuing some sort of action, but we don’t know that’s going to happen until we actually get the report back from the Highway Patrol.”
In an unrelated case, Lamer has been charged with two counts of Class-C felony theft, involving a previous employer before she was hired by Kimberling City. A preliminary hearing for that case is set for March 17 in Taney County.
As far as Kimberling City’s missing money is concerned, Conway said that the city shouldn’t feel any effects on its operating budget.
“A few years ago, we did a $6 million sewer project, and the sewer department borrowed money from the general fund for that sewer project,” Conway said. “The sewer fund owed the general fund about $850,000. We pay that back a little every year, and what it’s doing is reducing the amount paid for 2004 from sewer fund to general fund. It doesn’t affect any budget amounts.”

Common fraud
The fraud allegedly committed in the Kimberling City case is one example of what Southwest Missouri State University professor and certified fraud examiner Michael Cerullo said is the most common type – employee fraud.
“The other type is management fraud committed on behalf of the organization – cooking the books, financial statement fraud like the WorldComs and the Enrons,” Cerullo said. “Most fraud is in smaller companies or organizations and committed by insiders.”
Penny Clayton, Drury University accounting professor and certified fraud examiner, said that the money could be difficult for the city to recover.
“The research suggests that these ‘fraudsters’ convert those monies into something else. Usually they buy a home or a more expensive car, or they spend it on clothing,” she said. “So sometimes (the money is) hard to recover because one of the reasons they were stealing from the organization was to maintain a certain type of lifestyle. Sometimes they’ll be asked to pay a certain percentage over the next 10 years or 20 years or even the rest of their life, depending on how much they stole, but it’s hard to get back the money immediately.”
The report listed a number of weaknesses in the city’s accounting and recording techniques, including a lack of adequate controls over receipts, no segregation of duties related to the city’s accounting and computerized accounting systems, lack of adequate documentation on customer sewer accounts and a lack of timely deposits of payments received by the city.
Cerullo said that such weaknesses are the result of a lack of a hands-on approach to fraud.
“They find it and then investigate it, rather than proactively trying to prevent it or detect it,” he said. “If they spent most of their money up front putting in preventive and detective measures, they’d end up overall spending a lot less money because they wouldn’t have to go through these big, lengthy court investigations, getting attorneys involved and so on.”
The audit report added that the city has taken steps already to correct some of the system’s weaknesses, including making sure the person responsible for sewer collections doesn’t have access to city money and setting up the system so that all credit adjustments have to be approved by the mayor.
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