YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2005-08

February 2005

The following problems were discovered as a result of an audit conducted by our office of the City of Holt, Missouri.

The City of Holt does not have a formal bidding policy.  Bids were either not solicited or bid documentation was not retained in several instances, including a furnace ($1,978), and rock and gravel for streets ($3,514).  The Board of Aldermen indicated the furnace was an emergency purchase, but documentation of the emergency was not maintained.  Additionally, proposals were not solicited for legal services or accounting services.

The city operates a sewer system that provides service to approximately 200 customers.  The city issued revenue bonds for constructing, extending, and improving the city's sewer system.  This bond requires the city establish user charges for the sewer to produce net revenues available for debt service payments of 110 percent of the current year's debt service requirement.  Net revenues in fiscal year 2004 were only 86.8 percent of the debt service requirement,  and a formal review of sewer rates has not been performed the past several years.  In addition, the Board of Aldermen has not followed the adopted ordinances regarding service disconnections and sewer deposits, and the city does not perform monthly reconciliations of total sewer billings, payments and delinquent amounts.

The City Clerk also serves as the City Treasurer and City Collector and is responsible for all record keeping duties of the city, which is contrary to an Attorney General's opinion.  Additionally, the duties of receiving, recording, and transmitting court receipts are not adequately segregated as the Court Clerk performs all of the duties related to recording transactions and depositing monies.

The Board of Aldermen occasionally held closed meetings; however, minutes of applicable open meetings do not always disclose the vote taken to close the meeting and often do not disclose decisions made or actions taken in closed session.  In addition, the closed meeting minutes indicated the board may have discussed items which are not allowed by the Sunshine Law. 

The city does not have a formal policy regarding public access to records and improvement is needed in the organization of the city�s ordinances.

The city paid the mayor and a board member $396 and $5,232, respectively, for street work during the year ended March 31, 2004.  The board indicated this was done because they were unable to find anyone else to perform this work and the Mayor and this Board Member have been paid for this type of work for the past couple of years.  In March 2004,

the mayor repaid the city for compensation he received during the year ended March 31, 2004.  The board should consider seeking help from their legal counsel in establishing city policies regarding these types of payments.

The city's budgets are in need of improvement and do not include some information required by state law. The General Fund is the only fund budgeted by the city and did not include a budget message, information regarding the city's debt, beginning and ending fund balances, and actual revenues and expenditures for the preceding two years.  In addition, actual disbursements for the General Fund exceeded the approved budget by $24,931 during the year ended March 31, 2004.  The board did not detect the overspending because they do not perform budget to actual comparisons prior to approving disbursements.

A semi-annual financial statement was not published as required for the period April 1, 2003 through September 30, 2003.  State law indicates the city cannot legally disburse funds until the financial statement is published.

Also included in the report are recommendations related to vehicles and equipment usage, capital assets, and developing a street maintenance plan.

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