YELLOW SHEET
Office of the State Auditor of Missouri
Claire McCaskill
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YELLOW SHEET Office of the State Auditor of Missouri |
December 20, 2000
Report No. 2000-126
The following problems were discovered as a result of an audit conducted by our office of the City of La Plata, Missouri.
The city relies heavily upon utility and refuse funds to subsidize the city's General, Dispatch, and Library funds. The city operates the General, Dispatch, and Library funds with deficit cash balances throughout the fiscal year, and then transfers utilities and refuse monies, as well as general sales tax revenues, to these funds at the end of the year. These transfers are usually recorded after the city's independent audit is completed.
The Electric, Water and Sewer, and Refuse funds are separate accounting entities designed to account for specific city activities. Utility and refuse revenues should be used to fund the operations of the respective utility and refuse services only. The existing utility and refuse rate structure has allowed the city to, in effect, levy additional taxes without a vote of the citizens. It appears the city has established higher than necessary utility and refuse rate structures in lieu of increasing general revenues or reducing services provided by the city. Without the continued subsidies from utility and refuse funds, the General, Dispatch, and Library funds would be in poor financial condition.
Although the General Fund generally maintains a large negative balance in the city's checking account, some General Fund monies are held in passbook savings accounts, one for the future purchase of a fire truck and the other for monies collected from the city's soda machines. The balances in the accounts at June 30, 2000, were approximately $25,000 for the fire truck and approximately $1,900 from the soda machines. Considering the large negative balances of the General Fund in the city's checking account, the board should consider using the monies in the passbook accounts to pay current obligations.
State law prohibits municipalities from budgeting a deficit balance. The city's budgeted disbursements for the year ended June 30, 2000, exceeded available resources by more than $289,000, $60,000, and $8,700, for the General Fund, Dispatch Fund, and Library Fund, respectively. This resulted in budgeted deficit fund balances for these funds. In addition, the city's budget for the year 2001, ending June 30, includes disbursements that exceeded available resources for these funds.
City library monies are held in the custody of both the city and the Library Board. The city has custody of the library's property taxes, interest, grant receipts, operating revenues, and subsidies from other city funds. The Library Board only has custody of donations and memorial contributions received. There is no written agreement between the city and the Library Board to outline the responsibilities of each party. State law indicates all monies received by the city for a city library shall be disbursed to the library board treasurer monthly and city library boards shall have exclusive control of the expenditure of library monies. If the city continues to provide certain accounting and other services to the Library Board, there should be a written agreement which describes the responsibilities of each party.
The city owns a fire station which is occupied by both the La Plata Volunteer Fire Department (L VFD) and the La Plata Rural Fire Protection Association (LRFP A). Other than a building rental agreement between the city and the LRFP A, there are no written agreements between the city and these entities which outline the rights and responsibilities of each party, and as a result, the city has little assurance that city monies and assets are only used to provide fire protection services to city residents. From July 1999 through May 2000, LRFP A and L VFD responded to 37 calls within the city limits and 42 calls outside the city limits. There have been no formal studies regarding the percentage of services provided to city and non-city residents, and other than the building rental agreement, the cost allocations between the city and these entities are based on informal verbal agreements.
The city of La Plata owns the land on which the city cemetery is located. The city allows the La Plata Cemetery Association (LCA) to maintain custody of all monies received for the preservation, care, upkeep, and adornment of the city cemetery, including money received from the sale of cemetery lots, and to make all decisions regarding the use of these monies. However, the city has not entered into a written agreement with the cemetery association defining the rights and responsibilities of each entity, and has not established procedures to ensure the LCA is in compliance with statutory requirements regarding the investment and use of cemetery monies. The city does not require the LCA to be audited or to provide financial reports to the board on a regular basis.
The city owns a golf course and a lake which are operated under the authority of the Park and Recreation Board. Board minutes were not retained for meetings prior to January 24, 2000. In addition, board minutes were not signed. Also, golf course receipts are transmitted to the city approximately once a week and receipts are not always kept in a secure location. Prior to transmittal, some receipts are kept in an unlocked box in an unlocked drawer. Weekly transmittal amounts for the month of June 2000 ranged from $2,767 to $5,735.
The city does not have a formal bidding policy. The decision of whether to solicit bids for a particular purchase is made on an item-by-item basis. Although it appears the city did solicit bids for some purchases, bids were either not solicited or bid documentation was not retained for the purchases of a truck ($23,350), water pipe ($13,779), and water meters ($11,463).
The Police Chief and City Collector accrue personal days, vacation leave, and sick leave. The city pays these elected officials for unused leave when they leave office. Annual salaries of city elected officials are set under state law and city ordinance. State law does not authorize compensated leave for elected officials. In addition, the city is not consistently following its leave accumulation policy. Some employees were allowed to exceed the maximum accumulations.
The duties of receiving, recording, reconciling, and depositing monies are not adequately segregated. The City Clerk, Deputy City Clerk, and City Collector collect money and issue receipt slips.