YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

November 17, 2003

Report No. 2003-112

The following problems were discovered as a result of an audit conducted by our office of the City of Homestown, Missouri.

The City of Homestown has failed to implement 28 of the 40 recommendations made in our prior report that covered the year ended December 31, 1997.  Although the city indicated in that report that most of the recommendations would be implemented, many recommendations are repeated in the current report.  Failure to implement these recommendations and the city's inadequate financial records and procedures have resulted in the following:

• The city has underfunded the Sewer Replacement Fund by $6,405 and the Sewer Fund had a negative $2 balance at December 31, 2002.  The monthly sewer rates charged appear inadequate to pay the costs of operation and maintenance of the sewer system.  The city does not annually review the sewer rate to ensure sufficient revenues are generated to adequately maintain the sewer system as required by city ordinance.
   
• The city does not prepare or adopt annual budgets, does not publish semi-annual financial statements, and does not submit annual financial reports to the State Auditor's Office.
   
• A separate accounting of state motor vehicle-related monies or trash revenues and expenses is not maintained.  The city may be overcharging its residents for trash services.
   
• Prenumbered receipt slips are not issued for some monies received, receipts are not deposited intact, nor on a timely basis, and receipt slips were not always properly voided and/or retained.  The City Clerk does not adequately record all transactions in city accounting records or reconcile the accounting records to bank records and the Board has not established procedures to review her work and records. 
   
• Vendor invoices or other supporting documentation were not retained for some expenditures, payments totaling $1,425 made to the police officer appear to be taxable compensation but were not reported on his W-2 form, and documentation is inadequate to support the allocation of the City Clerk's wage expenses to city's funds.
   
• The Board has not held public hearings on the city's proposed property tax rates and the city could improve its procedures for the collection of delinquent property taxes.
   

• Improvement is needed in the organization of the city's ordinances.  Many of the city's ordinances are old and outdated and some could not be accounted for or located.  Board minutes are not signed by the City Clerk, the Mayor, or a member of the Board of Aldermen. Improvement is needed in the way closed meetings are held and documented.  The city does not have a formal policy regarding public access to city records.

Complete Audit Report