YELLOW SHEET Office of the State Auditor of Missouri |
December 28, 2000
Report No. 2000-131
The following problems were discovered as a result of
an audit conducted by our office of the City of Louisiana, Missouri.
During the period between December 1998 and January 2000,
fines, court costs, and bonds received by the court totaling over $3,800 were
not deposited to the court�s bank account.�
The monies that are missing represent cash receipts which were received
and recorded but not deposited.� These
missing funds were not detected on a timely basis due to numerous internal
control weaknesses, inadequate segregation of duties, and little or no
independent review.�
The Court Clerk resigned in November 2000.� Information gathered during our review has
been turned over to the Pike County Prosecuting Attorney�s office and the Pike
County Sheriff�s office.
In late 1996, the city decided to construct a new water
treatment plant rather than try to bring its two existing water treatment
plants into compliance with new state Department of Natural Resources (DNR)
regulations.� Letters were sent to the
owners of the two sites determined to be feasible indicating that the city was
interested in buying one of the sites.�
The city rejected an offer from one individual of approximately $300,000
and accepted the offer from the second individual of $120,000 plus the old
water treatment plant land (valued at approximately $32,000 by the Pike County
Assessor).
The
city did not obtain a professional appraisal of the land prior to
purchase.� According to the Pike County
Assessor, the estimated market value of the building and land, prior to the
city�s purchase, was approximately $44,000.�
The disparity between this amount and the amount paid demonstrates the
benefit of an independent appraisal to help establish the market value of the
land.
In January 1997, the city signed a contract for the land
contingent upon the passage of the bond issue in April 1997.� The bond issue passed and DNR approved the
plans in October 1998.� The city signed
a contract with a construction company in February 1999.� The contract for the purchase of the land
for the new water treatment plan stated that the city would include a penalty
clause in the new plant construction contract.�
Although the wording is unclear, it appears the clause would require the
construction company to pay a $500 per day penalty if the new plant was not operational
within 24 months of the passage of the bond issue.� The contract the city signed with the construction company,
however, did not include this clause, but instead included a clause providing
for a $500 per day penalty if the construction was not completed within 455
calendar days of the date the contract was signed.�
In April 1999, based on the required clause in the land purchase
contract, the former owner of the land requested that the city either vacate
the old water treatment plant facilities or that the city pay rent for the use
of the facilities.� The city refused and
the owner filed a lawsuit against the city in April 2000.�
In
1999, the city purchased a new city hall building for $100,000.� During the year ended May 2000,
approximately $34,000 was spent in renovations, including more than $7,000 in
labor costs and $26,000 in materials.�
These expenditures were not planned for in the city budget.� The renovations were authorized by the Mayor
but were not formally approved by the city council prior to incurring the
charges as required by city ordinance.�
In addition, there is no documentation that bids were solicited for this
work and no contract was signed with the individuals performing the labor.
In
June 2000, the city started collecting late fees of two-percent of the
delinquent balance each month on its water bills.� The city has an informal policy that allows city employees to be
exempt from paying these late fees. In addition, it is currently the city�s
informal policy to allow city employees who normally operate city equipment to
borrow the equipment during non-working hours for personal use.�
Prior
to April 1998, the city had a credit card to be used for miscellaneous city
purchases.� According to the current
Mayor and the City Superintendent, the city previously had an informal policy
allowing personal use of the credit card by city employees.� Employees who used the card for personal use
were supposed to either reimburse the city for the personal charges or pay the
credit card company directly; however, the city did not track these personal
charges to ensure reimbursement was received from the employees.� Payments were processed without supporting
documentation, approval, and documentation of purpose.� In April 1998, the credit card was cancelled
by the newly elected Mayor. Personal expenditures totaling $1,074 were charged
to the card from June 1996 through April 1998; the City Clerk could not provide
documentation indicating these were city charges.� Only $204 of these personal charges have been shown to be
reimbursed to the city.� The City Clerk
provided us with documentation showing reimbursement had been made in 1997 for
an additional $267; however, this documentation was not legitimate and appeared
to be falsified.� The city indicates she
paid $267 to the city and resigned in October 2000.
The
city does not have a written depository agreement with an investment firm or
the banks requiring collateral securities to be provided to cover deposits in
excess of Federal Deposit Insurance Corporation (FDIC) coverage.� Certificates of Deposit are covered by FDIC
Insurance up to $100,000; however, one CD exceeded the FDIC coverage by $8,000
at June 30, 2000.� The city also has
money market accounts that are neither insured or guaranteed by the U.S.
government.�
The
city does not have a formal bidding policy.�
The decision of whether to solicit bids for a particular purchase is
made on an item-by-item basis.� During
the past few years, bids were either not solicited or bid documentation was not
retained in several instances, such as for a street sweeper costing $95,444 or
two backhoes costing approximately $87,000.�
The
city does not maintain records to account for all property owned by the
city.� The city owns approximately 30
vehicles and has not adopted a formal policy regarding the use of city-owned
vehicles, including policies which prohibit personal use.�