Report No. 2009-120
October 2009
Complete Audit Report
Findings in the audit of the City of Pleasant Hope
Potential Conflicts of Interest
A number of transactions were noted between the city and businesses owned by an Alderman or relatives of an Alderman for purchases of various goods and services.
Bidding Procedures
While the city made improvements to its bidding procedures and adopted a bid policy in December 2008, several items purchased in 2008 were not bid and the new bid policy does not require the Board to document emergency situations when bids are not obtained. The city did not solicit proposals for engineering services for construction of a bridge and has contracted for legal and audit services with its current attorney and independent auditor for several years without conducting a selection process. The city has not periodically solicited proposals from various banking institutions for the deposit of city monies and does not have a written agreement with its depository bank.
Disbursements
Employees were not always required to submit invoices for employee reimbursements. As a result of not adequately reviewing disbursements, the city was not aware of a duplicate payment made to a former Alderman. Controls over the city's credit and debit cards need improvement, and prevailing wage rates are not adequately monitored by the city. Fuel and usage logs are not maintained for the city's equipment and vehicles, and fuel usage is not reconciled to fuel purchases. The city has not entered into a written rental agreement for use of a garage owned by the local fire department.
Restricted Monies
The city has not established adequate procedures to ensure disbursements are properly allocated among funds and restricted monies are disbursed only for their intended purpose. The city did not track the balance of state motor vehicle-related monies, and Police Officer Standards Training and Law Enforcement Training fees are not properly accounted for separately or maintained in a separate fund. Documentation does not exist to support the allocation of some disbursements to city funds.
Federal Emergency Management Assistance
The Board did not obtain reimbursement of Federal Emergency Management Agency (FEMA) funds for work completed related to an approved FEMA project. The city did not solicit bids for some excavation work and supplies purchased as required by FEMA.
Payroll Controls and Procedures
The city overpaid the former Chief of Police $1,201 for additional vacation hours upon his resignation. The city did not require employees to provide proof of payment for outside insurance premiums paid by the employees, which were reimbursed by the city. In addition, these payments were not included on the employees' W-2 form and were not subjected to payroll tax withholdings. The city did not require timesheets be prepared or records of vacation and sick leave be maintained for employees until January 2009.
During 2007, additional compensation was paid to a former City Clerk and a former part-time meter reader; however, timesheets or other supporting documentation was not retained to support this additional compensation. In addition, these payments were not included on the employees' W-2 form and were not subjected to payroll tax withholdings. City personnel files are incomplete.
Utility Controls and Procedures
Significant problems were identified in the control procedures related to the city's utility system. The city does not perform monthly reconciliations of total amounts billed, payments received, and amounts unpaid for utility services. There is no independent approval of adjustments posted to the utility system and the justification or reasons for the adjustments are not adequately documented. Sewer and water service is not always shut-off in accordance with city ordinance when accounts are delinquent, the city has not established formal written policies and procedures related to payment plans, and some city ordinances are not enforced. Deposits totaling at least $2,700 were held for 71 customers no longer receiving utility services. While the city maintains a list of water deposits, a separate fund is not maintained; therefore, the list of water deposits cannot be reconciled to related balances. The city does not adequately account for deposits charged to owners of rental properties. The city has not performed a formal review of the water and sewer rates for several years.
Accounting Controls and Procedures
Accounting duties are not adequately segregated, and improvement is needed in the handling of city receipts. The cash balances on the city's balance sheet were overstated because the City Clerk did not properly record interest earned and the redemption and purchase of several CDs. Controls over the petty cash fund need improvement.
Budgets, Financial Reporting, and Maintenance Plans
The city's 2009 and 2008 budgets were not accurate and complete. The city overspent the budget during the year ended December 31, 2007, and the 2008 budget was not approved by the Board until March 2008. The city did not submit an annual financial report to the State Auditor's office for the year ended December 31, 2008, and formal maintenance plans for the city's utility system and roads have not been prepared.
Other findings in the audit report relate to meeting minutes, ordinances, and board approval, and capital asset and inventory procedures.
Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov