Auditor Galloway Finds Coffey Missing $60,000+

An audit of the city of Coffey released Thursday by State Auditor Nicole Galloway shows more than $60,000 missing from the small northwest Missouri town. According to the audit, over a period of almost two years the former city clerk failed to make deposits, received improper payroll payments, and falsified board minutes and various financial reports. Coffey, located in Daviess County, has a population of 166 (2010 census).

“My audit found a pattern of missing deposits, suspicious checks, and falsified minutes and financial reports, along with what can only be described as a shell game of moving money between various city accounts in order to avoid detection,” Auditor Galloway said. “All of this was compounded by minimal, and often non-existent, oversight by city officials.”

As Coffey city clerk from September 2015 to August 2017, Mary L. Browning was solely responsible for the financial accounting functions and records of the city. She was terminated on August 2 of last year. The audit found that during her employment, Browning did not deposit almost $34,000 in utility payments, including $2,645 she credited to her own utility account.

In addition to the missing deposits, improper payroll checks totaling $24,634 were written to Browning from the city’s water and sewer bank accounts; payroll records also indicate she was overpaid an additional $1,556 because she entered in a different number of hours on the payroll report than what was recorded on her timesheets. Although city payroll checks require the signatures of both the mayor and the city clerk, members of the city’s Board of Aldermen indicated to the Auditor’s Office that the former mayor often signed blank checks in advance.

As part of the scheme, Browning created false meeting minutes to make it appear the Board of Aldermen authorized her making a withdrawal and deposit between accounts. Over the course of her employment, Browning made numerous transactions between the city’s nine checking accounts and a savings account. She also prepared false financial statements for the city that significantly over-stated the balances in the city’s accounts.

The audit cites lax oversight by both the Mayor and the Board of Aldermen, which at the time included Browning’s husband. Alderman Browning voted to approve a pay raise to his wife, a violation of Missouri law, and also approved paying bills at many meetings that included improper payroll checks and regular payroll checks to his wife. In addition, there was a lack of safeguards through basic accounting controls and procedures, including the city’s failure to obtain annual audits as required.

A bank official contacted a Board member last August regarding suspicious activity on city bank accounts. After terminating the city clerk once this information came to light, the Board asked local law enforcement for assistance.

The Daviess County Prosecuting Attorney subsequently requested an investigation by the State Auditor’s Office. After an initial investigation by her office, Auditor Galloway determined further investigation through an audit was warranted. The Board of Aldermen then passed an ordinance formally requesting and authorizing the audit, the results of which were announced today.

“Particularly for a town this size, the amount of missing money we discovered can have a direct impact on the services available to residents,” the Auditor said. “This is a serious breach of public trust at the expense of citizens. In addition to the recommendations the audit gives to city officials to help them work to restore that trust, I’ve provided information from the audit to appropriate law enforcement agencies to determine further action.”

Auditor Galloway has turned the report results over to local, state and federal law enforcement authorities and says her staff stands ready to assist prosecutors in any way possible. The full report on the city of Coffey, which received an overall rating of poor, can be found online.

State Auditor Visits GHS Paper Tube Factory in Albany

Missouri State Auditor Nicole Galloway met with community leaders in counties across north Missouri to discuss issues related to small business development and growth, including an ongoing follow-up audit of the Missouri Small Business Regulatory Fairness Board.

Auditor Galloway's small business tour included a stop in a Gentry County, where she toured GHS Paper Tube and Core Manufacturing Company in Albany. The company manufactures paper tubes and cores for industrial packaging, shipping and other specialty or custom business needs, and is currently rebuilding after a fire devastated the facility earlier this year.

"We know small businesses across the state are committed to their customers and their communities, and I've seen firsthand the dedication of many of these small business owners and operators, including the hard working folks at GHS Paper Tube and Core Manufacturing," Auditor Galloway said. "Even after a fire destroyed much of the facility just eight months ago, they're back up and operating and providing products and service to their customers. Small businesses across the state take pride in what they do, and they demonstrate a resilience that benefits our communities and our state."

In Sullivan County, Auditor Galloway participated in a small business roundtable discussion hosted by Milan Area Chamber of Commerce, where she met with representatives of the chamber and local business leaders in Milan.

The tour is part of an effort to gather input from small business owners and entrepreneurs across the state to assist in a collaborative effort to make recommendations and improve operations and service of the Small Business Regulatory Fairness Board.

"No one knows small businesses better than the people who run them, and that's why I've made it a priority to visit with business owners to get input on the issues that matter most to them," Auditor Galloway said. "It's critical to the health of our economy that we promote an environment where small businesses can thrive, and that starts by making the regulatory process less burdensome, and getting input as we move forward with recommendations to improve the board's operations."

The Small Business Regulatory Fairness Board was created to serve as an advocate for small businesses across Missouri but has not fulfilled its obligations under the law, and has been plagued with issues that have undermined its effectiveness. In May, Auditor Galloway shared the results of an audit of the board, which found sub-par operations due to inadequate staffing, board vacancies and lapsed terms, and a general lack of support for the board's statutorily required duties. Because the board received a rating of poor, the lowest available, a follow-up audit will be conducted to determine whether recommendations have been implemented. To provide input or information for consideration during the course of the follow-up audit, contact the State Auditor's Office at moaudit@auditor.mo.gov or by calling 800-347-8597.

The trip also included a visit to the Carrollton County courthouse where Auditor Galloway congratulated county officials and employees on receiving an excellent rating, the highest available, on their recent county audit. This was a first for any county in the state since the ratings system was implemented in 2011. Auditor Galloway also met with county officials and leaders in Mercer, Schuyler and Scotland counties.