Report No. 2011-21
May 2011
Complete Report
Findings in the audit of the City of Chula
Audits, Budgets, and Financial Reporting
The city does not obtain required annual audits of its water and sewer systems, properly prepare and monitor budgets, or prepare required financial reports. In order to comply with state statute and the terms of its loan agreement with the U.S. Department of Agriculture Rural Development Agency, the city is required to obtain annual audits of its water and sewer systems. The city's budgets were incomplete and not monitored to actual disbursements, and the city overspent three funds for a total of almost $30,000 in fiscal year 2010. The city failed to publish semiannual financial statements and has not submitted annual financial reports to the State Auditor's office since 2002 as required by state law. Finally, the board should require the Park Board to file financial reports with the city regularly to help ensure funds are used properly.
Accounting Controls and Procedures
Accounting duties are not segregated, and insufficient oversight exists to ensure transactions are properly recorded. The City Clerk prepares utility bills, records utility fees, receives and deposits monies and performs bank reconciliations with little or no oversight. Receipt slips are not always issued and deposits are not timely. The city does not ensure the composition of receipts matches the composition of deposits. Water, sewer and trash transactions are accounted for in the same fund, which makes it difficult to ensure the city is charging appropriate rates. The city is not putting new customer utility deposits into the designated bank account and the list of utility deposits is not reconciled to the bank account, which allows errors to go undetected and makes it difficult to determine if enough monies are available to cover deposits. The city is not following up on insufficient funds checks despite a city ordinance requiring certain actions. Bank accounts are not reconciled promptly, and errors could go undetected.
Disbursements
The city is not documenting the allocation of some disbursements. Restricted funds can only be used for certain expenses, and the city should make sure disbursements are made from the appropriate funds. This also helps the city ensure it is charging the appropriate rates for services and assess the effectiveness of its programs. Some employees do not submit timesheets, so it is difficult to monitor the hours worked and substantiate the payroll.
Legal Issues and Ordinances
The city elects two aldermen from each of the two wards and one at-large; however, state law requires the city to either elect aldermen from wards or at-large, but not both. City ordinances are not complete and up-to-date and are not maintained in a well-organized manner. Some ordinances could not be located, and it was difficult to tell which ordinances had been repealed. Moreover, the city appears to be operating in violation of some ordinances, including the ordinance setting the City Clerk's salary.
In the areas audited, the overall performance of this entity was Fair.*
American Recovery and Reinvestment Act of 2009 (Federal Stimulus)
The City of Chula did not receive any federal stimulus monies during the audited time period.
*The rating(s) cover only audited areas and do not reflect an opinion on the overall operation of the entity. Within that context, the rating scale indicates the following:
Excellent:
The audit results indicate this entity is very well managed. The report contains no findings. In addition, if applicable, prior recommendations have been implemented.
Good:
The audit results indicate this entity is well managed. The report contains few findings, and the entity has indicated most or all recommendations have already been, or will be, implemented. In addition, if applicable, many of the prior recommendations have been implemented.
Fair:
The audit results indicate this entity needs to improve operations in several areas. The report contains several findings, or one or more findings that require management's immediate attention, and/or the entity has indicated several recommendations will not be implemented. In addition, if applicable, several prior recommendations have not been implemented.
Poor:
The audit results indicate this entity needs to significantly improve operations. The report contains numerous findings that require management's immediate attention, and/or the entity has indicated most recommendations will not be implemented. In addition, if applicable, most prior recommendations have not been implemented.
Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov
