Determine whether the Hannibal Fire Company (Company) Board of Directors (Board) established adequate controls over cash disbursements.
The Board did not establish basic internal controls over cash disbursements. As a result, the former Treasurer was able to misappropriate over $850,000 in Company funds during an eight-and-a-half-year period. For example, he was able to:
- Disburse over $451,000 in unauthorized checks to himself from January 2014 through May 2022.
- Use a Company credit card to make 794 personal cash advances totaling approximately $334,900 and personal purchases totaling over $62,300 from April 2016 through May 2022.
These improper disbursements went unnoticed for years because the Board did not review bills (claims) paid by the former Treasurer, receive written financial reports or review bank and investment statements and canceled check images. The Board also did not obtain an annual independent audit of Company records, as required.
At the onset of the audit, we learned the former Treasurer was deceased. As a result, we did not refer this matter to law enforcement.
- Work to seek recovery of misappropriated funds from the Company’s insurance provider and consult with legal counsel regarding other available remedies.
- Ensure claims are supported, audited and approved prior to payment and monitor the Treasurer’s work.
- Obtain an annual audit by an independent public accountant, as required.
Company officials agreed with our findings and indicated they initiated corrective action.