 |
YELLOW SHEET Office of the State Auditor of Missouri |
April 22, 1999
Report No. 99-26
Some problems were discovered as a result of an audit conducted by our office in response to the request of petitioners from Public Water Supply District Number 1, Newton County, Missouri.
NOTE: Recommendations as well as responses from the water district which correspond with the findings below are included in the audit.
The district does not have a formal bidding policy and supporting documentation was not maintained for some expenditures.
The district paid $18,000 per year to an individual for management and maintenance of the water district during fiscal years 1998 and 1997. This individual is responsible for receiving and depositing monies for the district. The district has used the same individual for several years, and there is no documentation of when the district last solicited proposals for these services.
Formal bidding procedures for major purchases provide a framework for economical management of district resources and help ensure the district receives fair value by contracting with the lowest and best bidders. The board agreed with our findings and plans to establish formal bidding policies and procedures.
A business owned by the son of a former board member who served until April 1998 was paid $12,543 from February 1997 to January 1998, to install water meters and lines and fix water leaks. The district did not solicit bids for the services. In addition, the former board member indicated he abstained from voting on contracting with this individual to perform these services; however, the board minutes did not always document specifically whether he abstained from voting and, in one instance, the minutes indicate he voted to contract with his son.
Discussions and decisions concerning transactions where potential conflicts of interest exist should be completely documented so that the public has assurance that no district official has benefited improperly. In addition, we recommended the Board of Directors establish a policy which addresses these types of situations and provides a code of conduct for district officials; the board agreed and plans to adopt a code of conduct.
The board should adopt procedures for independent reviews of billings, collections, delinquent accounts, canceled checks, and bank reconciliations. The method of payment is not recorded on billing stubs. Improvements are needed in recording hookup and meter connection fees. The amount of water primacy fees remitted to the state may not have been computed correctly. The district has not maintained adequate records of refundable meter deposits.
We recommend, and the board agrees, that independent reviews are performed and documented of the billing, receipt, deposit, and delinquent account records. The board ensures adequate follow up will be performed on delinquent accounts. We also recommended dual signatures be required on checks or independent monthly reviews be established of canceled checks and bank reconciliations. The board has said monthly independent reviews of canceled checks and bank reconciliations will be conducted.
Although the district's bylaws state that records shall be subject to inspection by any person owning land or residing within the district. We recommended, and the board agreed to establish, a formal policy regarding public access to district records which complies with state law. This policy should establish a person to contact and an address to mail requests for access to records.
The district contracted with an independent CPA to perform a review of agreed-upon procedures for the period January 1, 1997 through July 31, 1998; however, the district does not obtain audits as required by state law. The district has indicated that audits will now be performed according to state law.
The district's annual budgets were not fully in compliance with state law requirements. For example, the budgets did not include a budget message nor comparative statements of revenues and expenditures for the two preceding years as required. Instead, only one year of comparative data was included. In addition, the Board of Directors does not periodically compare actual revenues and expenditures to budgeted amounts. As a result, the actual expenditures exceeded budgeted amounts by $5,344 for the year ended December 31, 1997. The district says budgets will meet state law requirements and all expenditures over budgeted amounts will be approved by the board.
