Report No. 2010-89
July 2010
Complete Audit Report

Findings in the audit of the City of New Florence

Budgeting and Financial Reporting
Weaknesses were identified in the city's budgeting and financial reporting. Budgets do not include actual receipts and disbursements for the 2 proceeding budget years. The city's published semiannual financial statements do not fully comply with statutory requirements. The published financial statements do not include all city funds or the indebtedness of the city, and do not present a detailed account of expenditures.

Notices, Meetings, and Minutes
Procedures for conducting and documenting Board meetings need improvement. Various requirements in the Sunshine Law regarding open and closed meetings were not always followed. Meeting notices and agendas used the same statement to indicate the potential for a closed meeting, although no closed meeting was planned or held. Reasons for closing meetings were not always documented, some issues discussed may not be allowable under the Sunshine Law, and some decisions were not publicly disclosed. Agendas are not prepared for all Board meetings, and sufficient detail of matters discussed and action taken is not always documented in the minutes.

Accounting Controls and Procedures
There are numerous weaknesses in the city's accounting controls, records, and procedures. There is minimal oversight and inadequate segregation for the Accounts Clerk's duties. Receipt slips are not always prepared timely. Also, the method of payment, date, and preparer are not always documented. In addition, the composition of receipt slips issued is not reconciled to the composition of deposits and the numerical sequence of receipt slips issued is not always accounted for properly. Receipts are not deposited on a timely basis. Bank reconciliations are only performed for one of the city's ten bank accounts. The city does not maintain separate funds for the financial activity of its water and sewer operations. The city has not established a separate fund and/or accounting to ensure law enforcement training receipts are expended only for the purpose of local law enforcement training. The method of allocating payroll expense among the various city funds is not supported by documentation. Controls and records over the petty cash fund need improvement.

Utility Policies, Procedures, and Records
There are significant weaknesses in city operations related to gas, water, sewer, and trash services. The Board has not adopted a comprehensive ordinance regarding utility collections, fees, and delinquent accounts. The method of allocating late fees collected to the various utility operations is not supported by documentation. Delinquent accounts are not sent to the city's collection agency on a timely basis. The city does not compare or reconcile gallons of water billed to customers to gallons of water pumped. Additionally, the city does not reconcile the units of natural gas billed to customers to units of natural gas purchased. The method of payment is not always accurately posted to the city's computerized utility system and the composition of the receipts posted is not reconciled to the deposit. Although the city retains an administration fee of almost $2 from each customer's monthly payment for trash services, the city has not documented the administrative costs of providing trash collection services.

Computer System
The city's computers and files are vulnerable to unauthorized use, modification, and destruction. Accounting and utility files are not backed up on a periodic, predefined basis. Access to computers and files is not adequately restricted to only authorized users, and a password is not required to access the utility system. Security controls are not in place to lock computers after a certain period of inactivity.

Expenditures
The city does not have a formal bidding policy for the purchase of goods and services. When bids/proposals were solicited, bid documentation was generally not retained. The city has not documented its evaluation and selection of engineering services. The agreements for city attorney services are not current, and the city does not obtain written agreements when providing services to its residents. Although a list of all expenditures is approved by the Board at the monthly meetings, the approved list is generally not retained.

Personnel Policies and Procedures
The city has not established an ordinance for employee compensation or the term of office or duties for the City Clerk. Records of leave earned, taken, and accumulated are deficient. As a result, the city has little assurance that payments for accumulated leave are proper. Also, payments made to terminated employees were not supported by documentation, and the city paid these employees more than required by policy. Some employee personnel files reviewed were incomplete.

Capital Assets
The city does not maintain comprehensive records of capital assets, property items are not tagged for specific identifications and annual physical inventories are not performed. Except for the two police cars, usage logs are not maintained for city vehicles, and fuel purchases are not reconciled to billing statements.

Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov