YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

The district's current bidding procedures could be made more effective by adopting a comprehensive policy with a lower dollar limit.� The current policy states that a formal bidding process may be used for projected expenditures of $12,500 or greater for items such as supplies, materials, equipment and contractual services.� In addition, the district policy requires all construction projects over $12,500 be bid as required by state law.� However, the policy does not require bidding for non-construction items and does not indicate the types of bidding that can be done to ensure the district receives the best economical value on its purchases for amounts less than $12,500.� A more comprehensive policy would require bidding and would identify specific bidding procedures that are required for purchases under $12,500.� 

In addition to complying with state law, competitive bidding helps ensure the school district receives fair value by contracting with the lowest and best bidders.� Bidding helps ensure all parties are given an equal opportunity to participate in the district's business. 

Our audit also found that the district did not formally bid all purchases over $12,500, and documentation of informal price quotations was not maintained.� The district paid a single vendor approximately $33 per hour, in labor costs, to service district buses and vehicles.� The total parts and labor costs paid to this vendor were $311,879 and $255,856, for the years ended June 30, 2001 and 2000, respectively.� The hourly rate was not bid. 

Also, bid documentation is not always received or retained by district personnel.� Without formal bidding or documentation there is no evidence the School Board received the lowest and best service. 

The school district does not always enter into written contracts defining services to be provided and benefits to be received.� The district's policy gives the School Board sole authority to enter into and approve contracts.� We noted the following concerns regarding contracts: 

�        There is no written contract between the school district and the vendor used to maintain and repair the district's buses and vehicles. 

�        There is no written contract between the district and its architect which outlines the services to be provided or the costs for those services. 

�        The district does not have a written contract with the company that provides maintenance supplies used for the repair and maintenance of district buildings. 

�        There are no written contracts with the three vendors providing a la carte food items to the Food Service department and five vendors providing soda or vending machines. 

�        There is no written contract between the district and its depository bank. 

�        Some written contracts are not signed by the School Board. 

District policy requires purchase orders be submitted for all purchases which are not specifically exempted by the School Board.� Thirteen out of seventeen purchases (76 percent) reviewed either did not have a purchase order, or the purchase order did not agree to the amount of the vendor's invoice. 

Overpayments to vendors were not discovered by district personnel on a timely basis.� A contractor submitted four invoices to the district totaling $74,026.� District personnel generated two checks, totaling $129,046, for these invoices.� The overpayment of $55,020 was not detected by the district; however, the vendor noted the overpayment and refunded the district.�  

Another contractor submitted two invoices for work done at several different schools, totaling $47,455.� Again, the district submitted two checks, totaling $58,730, overpaying the contactor by $11,275.� District personnel sought reimbursement from the vendor after we brought the error to their attention.

The district purchased goods and services from two companies in which a School Board member appeared to have a conflict of interest.� Additionally, district personnel processed some credit card payments without proper supporting documentation.�  

The district used Gifted Education monies to transport students to various functions which is an unallowable cost according to the Department of Elementary and Secondary Education's guidelines. 

The School Board amends the district budget after the expenditures have been incurred.� The final checks at year end are prepared and the expenditures are recorded in the district records before the budget is amended.� These checks are held until the budget is amended by the School Board.� After the budget is amended, the School Board approves the checks and, if the goods or services have been received, the checks are issued to the payees.� In some cases, the checks will continue to be held until payment is due to the employee or vendor. 

The budget should be amended before the expenditures are incurred or when the encumbrances are made.� In addition, the district should not be writing and approving checks for services not yet received.

Complete Audit Report