YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2006-63

October 2006

The following findings were included in our audit report on the Robinwood West Community Improvement District.

The district does not have a long range plan to pay off its loan or to fund future maintenance of its capital assets.  The cash balance of the district at December 31, 2005, was approximately $78,000.  Revenues have averaged approximately $141,000 over the last three years, with operating costs averaging $89,500 and loan interest and principal payments of approximately $32,000 annually.  However, in October 2008, $352,000 will be owed on the district's loan, which will exceed the annual revenues and available cash balance of the district.

The district obtained three bank loans totaling approximately $447,000 between 2001 and 2003 to fund capital improvements.  The loan agreements contained no provisions for the district to cancel the loan due to lack of appropriations.  The district appears to have entered into a long-term debt arrangement without a vote  authorizing the debt, which may be in violation of the Missouri Constitution. 

Numerous problems existed within the district's accounting records.  Supporting documentation for some disbursements could not be located or was filed incorrectly  and accounting records are not prepared using a consistent method.  An immediate record of receipt is not made for monies received,  and better controls and records are needed for rental security deposits.

Although the district has some purchasing and approval policies, it is not clear what disbursements need to be approved by the board and when. Various disbursements had no documentation of board approval including $4,314 to board members for expenses incurred.  In addition, one board member’s wife and son did work for the district and were paid $438. Adequate documentation is not always received for reimbursed expenses, and checks were issued without the required two signatures.  Bid documentation was not always solicited or retained, and reasons for selecting  higher bidders were not always documented.  Additionally, the district does not have a formal policy on credit card usage. Also, the district did not always enter into contracts for services received or retain signed contracts for district records.

Also included in the report are recommendations related to board minutes, meetings, resolutions and bylaws, budgets, financial reporting, snack bar operations, and capital assets.

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