YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

The Village of Bull Creek is experiencing serious financial difficulty due to the poor management decisions and actions related to their Phase II sewer project.� As of June 30, 2001, the village owes approximately $1,390,000 in principal payments on its sewer system.� Based on their current financial condition, the village may be unable to meet the debt service requirements of its sewer projects.� The financial problems have resulted from the lack of adequate planning and approval related to the Phase II sewer project which increased the village debt by $890,000.�� Since the village proceeded on Phase II without the approval of the Taney County Commission and the Taney County Regional Sewer District, it has been unable to use the Taney County's Sewer Sales tax monies distributed to the village to pay the related debt. 

In December 1999, the Board of Trustees entered into an agreement with the same project manager that managed Phase I to provide additional sewer improvements.� Phase II was treated as a "design and build" project in which the project manager handled all aspects of the project including the selection of engineers, inspectors, and construction contractors.� The village paid the project manager approximately $151,000 through December 31, 2001 for work performed on Phase II.� Additionally, the village paid a firm (owned by the project manager) $40,000 to arrange financing for Phase II .� The firm also agreed to assist the village in refinancing the debt on Phase I.� Neither the project manager nor the financial advisor submitted itemized invoices for the services provided. 

Through December 31, 2001, the village has paid approximately $743,000 on Phase II expenditures.� The village did not assure itself that it received the lowest and best price on the completed project since it did not competitively bid out any aspect of the project or ensure that bids were required by the project manager.� Further, the village's lack of oversight provided little assurance the fees paid the project manager (and the financial advisor) were reasonable and proper.� �� 

The village provides water, sewer, and trash services to approximately 250 customers.� Computer records, consisting of utility account billings and delinquent utility billings, were not properly retained.� From the utility records that were available, concern was noted regarding the collection of March 2001 utility bills.� Due to the lack of controls and the inadequacy of the village records, the village has no assurance that all utility payments received were properly deposited. 

There is no independent oversight or adequate segregation of duties related to the village's utility system.� The former Village Administrator and his wife (who served as Village Clerk until July 2001) performed all functions related to generating monthly utility bills, receipting and recording utility payments, making credit adjustments, depositing money received, and monitoring accounts for delinquencies.�� 

The former Village Administrator was allowed to use village equipment for his personal use.� In addition, the former Village Administrator and his wife spent numerous hours (approximately 15 hours per week) on the village telephone to access the village's Internet service provider.� During a three month period, over 10,900 minutes were used to access the internet and the village was originally billed over $1,600 for the related long distance charges.�� 

The audit also includes some matters related to bidding and expenditures, budgets and financial reporting, personnel procedures, ordinances and board meetings, accounting records and procedures, fixed asset procedures, and the municipal court, upon which the village should consider and take appropriate corrective action.�

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