Missouri State Auditor's Office

March 25, 2003

Report No. 2003-27

The following problems were discovered as a result of an audit conducted by our office of the Osage Ambulance District.

Actions taken by the board chairman during his current term of office appear to indicate that nepotism may have been committed.� The May 18, 2002, meeting minutes indicate the chairman voted to approve the salaries of all district employees, including the recording secretary (his son) and the billing clerk (his daughter-in-law).� The minutes of the July 23, 2002, board meeting indicate the board chairman presented the question of retaining his son as the district's recording secretary, and all six members of the board, including the chairman voted in favor.� However, the minutes of the subsequent meeting held on August 27, 2002, indicate the chairman withdrew his vote for the recording secretary position.

The board approves purchases from businesses owned by related parties, which may represent potential conflicts of interest.� Some board members either own businesses or have family members associated with businesses that are vendors of the district.� The board minutes do not show any indication that the related board members abstain when approving expenditures to related-party businesses.� Since July 1, 2001, the district spent $988 on ambulance supplies and maintenance from a business owned by a board member and $879 on insurance from an agency for which a board member's wife is employed.

The district did not adequately document plans for the new building project costing approximately $600,000.� No minutes were maintained for meetings held by the district building committee, and the district did not prepare comprehensive cost estimates for the project. �An appraisal was not obtained for the land purchased for the building site, and plans for financing the project costs were not documented.

The district does not have a formal bidding policy.� Bids were either not solicited or bid documentation was not retained for some purchases, including a used ambulance ($8,000), ambulance repairs ($2,000) and radio purchase/installation ($2,500).� In addition, the board has not established procedures to ensure its review and approval of disbursements is done on a timely basis and receipt of goods or services is not always indicated on invoices prior to payment.

The district did not solicit proposals for engineering services as required by state law.� The district selected an engineer for the construction of the new headquarters building without soliciting proposals from other firms.� The district has paid the engineer approximately $56,000 for services.

Some district expenditures do not appear to be a prudent use of taxpayer money.� These include $3,680 for employee incentive payments, $100 for flowers, $50 for an employee service award, and $438 for the annual Christmas banquet for district officials and employees.

Deposits are not made on a timely basis.� The billing clerk's and recording secretary's duties are not adequately segregated and there are no independent reviews of the billing clerk's or recording secretary's accounting records.� Improvement is needed in controls over the petty cash fund.� The billing clerk was not bonded as required by state law and the district does not maintain complete records to account for all district fixed assets.

The district's budgets do not include some information required by state law.� The budgets do not include a budget message, beginning available resources, estimated ending available resources, and prior years' actual revenues and expenditures.� A complete and well-planned budget, in addition to meeting statutory requirements, can serve as a useful management tool.

District bylaws and state law require annual audits of the district's accounting records; however, the district has not obtained an audit since the year ended June 30, 1999.� In addition, financial statements are not submitted annually to the State Auditor's office as required by state law.

The board does not keep minutes of closed meetings, and the minutes of open meetings do not indicate the specific reasons for closing the meetings.� In addition, the district has not adopted formal policies for public access to district records.

Also included in the audit are recommendations related to payroll, personnel matters, and bylaws.�