Report No. 2010-54
May 2010
Complete Audit Report
Findings in the audit of the City of Clever
Missing Funds
The City of Clever has a history of missing funds and given the varying methods in which funds are missing from the city, it is apparent the city's financial activity was not adequately monitored. This audit identified missing cash receipts of at least $7,568 between July 1, 2007, and February 29, 2008. Unrecorded checks were substituted into deposits in exchange for cash receipts, numerous cash receipts were not recorded in the computer system and not deposited, and credit adjustments were posted to reduce utility bills and cash was not deposited. The former City Clerk was charged and convicted of felony stealing for writing unauthorized checks to herself and other improper disbursements which, according to the city totaled $42,393 between August 1, 2006, and December 17, 2007. Our audit Report No. 2008-44, Thirty-Eighth Judicial Circuit City of Clever Municipal Division, issued in July 2008 identified at least $4,628 in municipal court cash receipts missing between July 1, 2006, and March 13, 2008.
Accounting Controls and Procedures
Numerous weaknesses were identified with the city's accounting controls and procedures. The Board of Aldermen has not established adequate segregation of duties or supervisory review over the accounting functions. Had adequate controls been in place, some of the missing funds may have been prevented. Receipt slips are not issued for some monies received and the method of payment received is not always documented. Additionally, receipts are not always deposited timely or intact. Further, some receipts and disbursements were incorrectly recorded in the city's accounting records, and the current City Clerk combined some general ledger account lines in the accounting software program causing the program to compile inaccurate totals in the city's financial reports. Also, some city records were not retained, there is a lack of follow up on outstanding checks, and bond coverage is not adequate.
Disbursements
Most disbursements are paid prior to Board approval, bids are not always solicited as required by city policy, the evaluation and selection of engineering services is not adequately documented, and the city has not updated written contracts for some services. City officials have not complied with the city's conflict of interest and purchasing policy. In addition, fuel purchases are not adequately tracked and monitored and mileage logs are not maintained for city vehicles. Some disbursements do not appear to represent necessary uses of public funds, and documentation does not exist to support the allocation of disbursements to city funds.
Financial Reporting and Budgets
The city does not comply with state law related to publishing financial statements and preparing budgets. The city's 2009 budget did not include all required information, and a budget was not prepared for the Library Fund.
Board Meeting Compliance
Minutes were not always prepared to document the matters discussed in closed meetings. Board meetings were routinely closed without recording the results of the vote to go into closed session or the reasons for the closed meeting. Minutes were not sufficient to demonstrate how some issues discussed in closed meetings were allowable under the Sunshine Law.
Payroll and Related Matters
Controls and procedures related to timesheets, employee leave, and payroll taxes and reporting need improvement. Timesheets for city employees are not signed by the employee to certify accuracy or by the employee's supervisor to indicate review and approval. Policy restrictions on employee earned leave benefits are not always followed and documentation of leave benefit accumulations, usage, and remaining balances are not properly maintained for some city employees. Additionally, the city does not have adequate procedures to ensure payroll and withholding amounts are properly reported and paid timely. The city paid $1,786 in penalties and interest for failing to file 2005 W-2 forms, failing to make a December 2007 federal tax deposit, and failing to file June 2008 payroll tax reports in a timely manner.
Water and Sewer System
The city needs to improve accountability over its water and sewer system. The city has not documented a review of water and sewer rates annually and has not notified users of rates charged in accordance with city policies. The city's computerized water and sewer billing system automatically compares the total water pumped to the total water billed to customers; however, there is no documentation the Board investigates and resolves significant unexplained water losses. Monthly water reports indicate in April 2009, the city experienced an unexplained water loss of 44 percent. In addition, adjustments made by the City Clerk and Assistant City Clerk to increase or decrease a customer's water and sewer account are not properly approved. Further, the city does not adequately account for refundable utility deposits paid by customers.
Assets and Data Controls
The city has not used 10 acres purchased in 2006 for $120,000, and does not have a documented plan for its use. The city did not obtain an appraisal prior to purchasing the property to ensure $12,000 per acre was a reasonable price. Also, controls over city assets and computerized data need improvement.
Municipal Division
While city officials responded that numerous improvements were implemented in response to recommendations made in Report No. 2008-44, Thirty Eighth Judicial Circuit City of Clever Municipal Division, issued in July 2008, some recommendations were not implemented, and monies are again missing. Municipal Division monies are not deposited timely and receipts are not reconciled to deposits.
Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov
