YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2005-06

February 2005

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

The former City Clerk/Collector was paid approximately $42,600 between January 2003 and March 2004; however, approximately $9,400 of the payments appeared to be questionable or not supported and were sometimes recorded incorrectly. The former City Clerk/Collector overpaid herself by at least $838 and $4,649 for tax commissions during the 2003 and 2002 tax years, respectively. In addition, two tax commission payments were recorded incorrectly by the former City Clerk/Collector in the city's accounting records, further concealing the overpayments. The former City Clerk/Collector also received a two percent increase in tax commission during her term of office, and as a result, was overpaid an additional $2,203. Additionally, the former City Clerk was apparently overpaid $1,185 in salary because recorded hours in the city's computerized payroll system exceeded those reported on her timecards and numerous errors in the calculation of total hours worked were made on her timecards. Further, the former City Clerk apparently overpaid herself $500 for attending and recording board meeting minutes.

Unauthorized purchases totaling $1,270 appear to have been made by the former City Clerk with a city credit card during December 2002. These purchases included toys, electronics, children and men's clothing, candy, holiday dinner supplies, and a sewing machine.

The city does not have a formal bidding policy. As a result, bids were either not solicited or bid documentation was not retained for items including: fire department equipment, $54,090; water tower maintenance, $19,513; insurance, $15,052; and fuel, $7,305. Additionally, adequate supporting documentation of expenditures was not always retained, payroll taxes were underpaid and reported incorrectly to the IRS, and the city entered into a verbal agreement to pay expenses of a local business in exchange for future services. The Board of Aldermen also does not consistently receive a detailed monthly financial report, Forms 1099 are not always filed with the Internal Revenue Service (IRS), and the city does not maintain mileage or maintenance logs for any of the city owned vehicles and equipment.

The former and current City Collectors did not prepare monthly or annual reports of taxes collected, and the delinquent tax report prepared by the former City Collector was incomplete. In addition, the city has not adequately monitored or pursued collection of delinquent taxes, and the former City Collector did not charge penalties on delinquent taxes.

An adequate review of city employees' timecards, computerized payroll reports, and payroll checks was apparently not performed by the board which allowed inaccuracies to go undetected. In addition, timecards prepared by city employees were not always signed by the employee, and the city does not maintain records of vacation, sick leave, and compensatory time earned, taken or accumulated for each employee.

The city does not perform monthly reconciliations of total amounts billed, payments received, and amounts remaining unpaid for its utility system. In addition, there is no independent approval of adjustments posted to the utility system, and the city does not monitor its water usage on a monthly basis.

The city does not issue receipt slips for some monies received and monies are not always deposited intact and timely. Controls over petty cash funds need to be established, and the city needs to evaluate the need for excessive accounts, including eight certificates of deposit and nine bank accounts, eight of which are non-interest bearing.

Also included in the report are recommendations related to other accounting controls and procedures, budgetary procedures, restricted revenues, board meetings, records, and ordinances, property records, and municipal court and police department controls and procedures.
 

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