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YELLOW SHEET Office of the State Auditor of Missouri |
March 29, 2001
Report No. 2001-30
The following problems were discovered as a result of an audit conducted by
our office of the City of Neosho, Missouri.
The city purchased a building for $450,000 to relocate the city hall without obtaining or requesting an independent appraisal of the property. The city�s process of selecting the new city hall and the related real estate document noting the charitable contribution made by the seller were not properly documented.
The city has contracted with the Neosho Area Chamber of Commerce for economic development services totaling $85,320 during the year ended September 30, 2000. It does not require any documentation of how these monies are used, and has not established any formal procedures to otherwise monitor the use of these monies. The city did not obtain an independent appraisal on the land purchased for construction of the �Tech Spec� building. Neither the city nor the economic development sales tax committee prepared or retained documentation to support the city�s decision to construct the �Tech Spec� building or any future plans to sell the property.
The city�s reconciliation of the total gallons of water billed to customers to the gallons of water pumped, indicates a significant water loss rate. During the year ending September 30, 2000, the gallons of water pumped exceeded the total gallons billed by 414,000,000 gallons, or 38 percent.
To help ensure all water usage is properly billed, the city should investigate and correct problems that cause the significant differences noted between total gallons of water billed to customers and the gallons of water pumped. The Public Service Commission generally recommends investigation if water usage not billed exceeds 15 percent. A similar comment was made by the city�s auditor during their annual audit.
The city has not performed a formal review of the adequacy of the water and sewer rates since 1994.
The city contracts with an independent contractor for management services for the Neosho golf course. The city paid this contractor $202,609 for these contract services during the year ending September 30, 2000. The City Manager indicated that bids have not been solicited by the city for these services. The city also paid this contractor an additional $74,600 in �grow-in� fees for the golf course project during the period of September 1999 through January 2001.
The city paid $65,000 to a not-for-profit corporation for a downtown revitalization project without entering into a written contract. In addition, the city paid $3,575 in rental payments for a storage building without a written rental agreement.
State law requires contracts of political subdivisions be in writing. The city should enter into written contracts for services rendered or obtained. A written contract, signed by the parties involved, should specify the services to be rendered and the manner and amount of compensation to be paid.
The city expended approximately $97,000 as a result of change orders needed for the golf course renovation and expansion project. The original contract totaled $474,000 for phase I. Council minutes indicated some of these change orders were due to a delay of a dam project and wet weather conditions. Due to these delays the council requested the contractor to start work on another phase of the golf course (approximately $53,000 of the change order total above) which had not been include in the original bid.
Change orders are normally used to make adjustments for minor problems that are unknown when construction projects are originally bid. They should not be used to make significant changes to existing contracts. The city should ensure that all aspects of the projects are adequately bid.
The city does not properly allocate administrative salaries to the various funds.
During the first eight months of employment with the city, the sports director accumulated 1,160 hours of compensatory time. Improvement is needed in the records and procedures of the city�s concessions.
Prior to fiscal year 2001, the city did not solicit proposals for a depositary contract. In response to the recommendation made by the city�s auditor during their previous annual audit, the city solicited proposals for a depositary contract and increased the interest rate earned on the city deposits by approximately 2 percent. To ensure the city continues to receive competitive banking services, the city should periodically seek depositary banking proposals from area banks.
