YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2005-17

March 2005

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

The city of Crestwood is in poor financial condition.  It appears the city's expenditures have consistently exceeded revenues in the General Fund for the last several years.  However, it appears the Board of Alderman may not have been completely aware of the severity of this problem until recently.  In 2003, a forensic audit of the city of Crestwood was performed for the years ended June 30, 2002 and 2001, and concluded that transactions authorized by the former city administrator and former finance officer represented mismanagement of city funds and presented misleading financial information to the board. 

The city has taken some steps to improve its financial position and/or to address control weaknesses noted by the forensic audit.  The Board must continue to monitor the financial condition of the city and develop a long-range plan which will allow the city to reduce its expenditures and/or increase its revenues to operate the city with available resources. 

Technology items totaling approximately $37,500, and $115,572 were purchased during the years ended June 30, 2003, and 2002 without proper bidding or board approval.  Additionally, while technology items purchased through the internet did not exceed $2,000 individually, the city did purchase enough of the parts to exceed the bidding threshold for the total purchased and within thirty days.  There was no documentation that bids for these computer parts were obtained, that prices obtained through the internet were lower than local stores, or that personnel scanned internet sites for the lowest price.  Also, the city had not established written policies documenting the required approval for purchases and the approval of the Board of Alderman and the director of finance/finance officer was not properly documented for some city purchases.

The city does not have adequate documentation to support $75,300 paid to the former City Administrator from December of 2002 through October 2003.  In December 2002, the city entered into a reassignment agreement with the former city administrator changing his position to administrative advisor and agreeing to pay him his current salary less standard

deductions until March 1, 2004.  The current City Administrator/Police Chief indicated that he met with the administrative advisor a few times a month to discuss history, organization, and various policies of the city; however, these meetings and/or discussions were not documented.  This agreement was terminated by the city in October 2003, and a lawsuit was filed against the former city administrator in November 2003.

The $830 monthly car allowance paid to the City Administrator/Police Chief does not appear to be reasonable or well supported, and the city had no written policies for travel expenses or charges for local meals.

The city does not have written policies or procedures for the approval of severance packages paid to employees.  Without written policies and procedures the Board cannot readily ensure severance packages are reasonable and a prudent use of city monies.

The city did not monitor the profit or loss of the aquatic center.  The Finance Department did not generate any reports comparing the receipts and expenses of the aquatic center to monitor its profit or loss.  The Parks and Recreation Department reported revenues of $192,575 for the 2003 pool season and city records indicate $299,138 in expenses for the same time period.

The Finance Department did not adequately monitor receipts of the Parks and Recreation Department.  The Parks and Recreation Department deposits monies into city accounts and then files reports and documentation concerning the deposits with the Finance Department.  Reports are reviewed by the Finance Department, but adequate verification work is not performed to ensure all monies collected by the Parks and Recreation Department are deposited and that prices established are adequate. 

The city did not have adequate documentation for allocation of salaries between funds for the year ended June 30, 2003.

Also included in the report are recommendations related to the disposition of city property, fixed assets, accounting procedures, the administrative costs charged to the Transportation Development District, and the municipal court division.

Complete Audit Report