PERRYVILLE -- State Auditor Margaret Kelly's office made a routine audit of Perry County's government finances, finding the county to be in good financial shape. However, auditors found that county officials didn't follow all budgetary procedures required by law.

Presiding Commissioner Karl Klaus said every time the auditor audits the county, the county learns something new and revises its procedures. This time it learned the county must hold a public hearing before amending its budget to spend more than originally authorized.

"The county adopts a budget in a public forum," said Frank Ybarra, a spokesman for the auditor. "In changing the budget, it needs to go through the same procedures."

That doesn't mean that Perry County changed its budget in secret; rather, that it didn't hold a public hearing every time it amended its budget to increase spending as required by law.

The state auditor routinely audits every county in the state that doesn't have its own auditor. State law requires those audits at least every four years. Under Margaret Kelly, the auditor's office has been auditing those counties every three years.

In the audit covering the three budget years ending on Dec. 31, 1996, the auditor found that the commission didn't prepare a formal budget for every county fund, that it overspent by small amounts some special budgets without amending them, and it didn't publish in a local newspaper the budgets for every fund it administers or routinely report them to the auditor's office.

Ybarra said the amounts overspent were insignificant. The audit shows overspending of $13,055 over three years out of a total budget of more than $13 million, or about one-tenth of 1 percent.

Some branches of the county government need to tighten up their procedures, according to the audit. For example, the auditor found that the Perry County Health Department did not adequately safeguard all its funds -- sometimes bank accounts had balances greater than the maximum amount insured by the Federal Deposit Insurance Corp.

The sheriff's department spent money from its reserve fund for bullet-proof vests, communication devices and calendars without authorization from the county commission, and kept those funds in a separate account. The audit stated that under state law, sheriff's departments in third-class counties can't keep their own accounts and must have authorization from the commission for any expenditures.

The sheriff raised those funds from selling calendars.

The county prosecutor doesn't work out of a county office. Thomas Hoeh, the prosecutor, runs the office out of a building he owns, using the office to maintain a private law practice as well.

The audit found no written agreement between Hoeh and the county detailing how public money will be spent and how Hoeh ensures that his private practice does not spend public money.

Under an oral agreement, the county paid Hoeh $125 a month rent while Hoeh supplied the space, furniture, law library and cleaning service. He shared two secretaries with the county.

"Since county resources should be used only for county business, the county should enter into a written agreement with the prosecuting attorney outlining exactly what the arrangements are," the audit stated.

Hoeh was out of town and could not be reached to comment, but in a written response to the audit he said he had reached a signed agreement with the county commission.

Ybarra said similar arrangements with county prosecutors are common in small counties where being prosecuting attorney is not a full-time job.

Ybarra emphasized that the audit did not turn up any missing money, but some of the loose procedures "point to the potential for loss or theft of public money."