YELLOW SHEET
Office of the State Auditor of Missouri
Claire McCaskill
|
|
YELLOW SHEET Office of the State Auditor of Missouri |
Report No. 2005-33
May 2005
The following problems were discovered as a result of an audit conducted by our office of the City of O'Fallon, Missouri.
Salary incentives totaling $230,500 and $129,750 were paid to various City of O'Fallon executive team members and other staff during 2003 and 2002, respectively. In 2003, these incentives ranged from $2,500 to $35,000. The incentive program was not a part of the city's personnel policy and there was no documentation that the Board approved the amounts, the tasks involved, or the time required. Many of the incentives appeared to be for tasks that may have been completed by respective positions regardless of the additional compensation. In 2003, the city contracted with an outside firm at a cost of $32,000 to perform a salary survey of positions in similar communities. In 2004, the city dropped the incentive plan; however, instead of basing the new salaries on the survey results, salaries were increased in the amount of the 2003 incentives to form new base salaries. Some of these salaries significantly exceed the survey data.
In January 2004, the former mayor, former city administrator, and seven board members along with their spouses traveled to Ireland with six business representatives and guests to try to establish a "sister city program". The trip was funded by donations from local businesses. In September 2004, a reconciliation of trip expenditures totaling $40,984 and donations received totaling $44,000 was completed. There is no accounting for the remaining $3,016, and $300 in costs did not have supporting receipts or invoices. There was no documentation of any formal reporting on the results of the trip in a board meeting and the city has not entered into a "sister city program". Additionally, several items were purchased by the city for each member of the group, including passport holders, luggage tags, and embroidered attach� cases, which do not appear to be prudent and reasonable expenditures.
In June 2003, the former mayor attended a three day National Mayors' conference in Denver, Colorado. The total cost for this trip was approximately $3,300. The mayor rented a van and drove to the conference along with members of his family, incurring costs of over $1,000 in van rental, fuel and extra meal and hotel costs. At the conference, the mayor selected an executive suite at a rate of $255, approximately $70 per night more than the lowest available in that particular hotel and approximately twice as much as the lowest cost alternative available. Additionally, several side trips were made outside the Denver area that were not a part of the conference itinerary.
The former city administrator attended a five day seminar at the Wharton School in Pennsylvania at a cost of $4,950 for the seminar and $610 for airfare, and additional hotel and meals. There was no documentation indicating the board approved this training prior
to incurring the expense and without documented approval by someone in a supervisory role, it is unclear if costly trips such as this are necessary or beneficial to the city.
The city does not have a written policy or established guidelines for the purchase and sale of real estate and has sold property without advertising for bids, purchased property without documentation that an appraisal was performed, and used services of a real estate agent that did not appear necessary. The city sold property to a developer in June 1999 for $275,000 and required in the sales contract that the old building be demolished and a masonry retail/office structure be built in its place within six months of site plan approval; however, five years have passed and the new building has not been constructed as required and the owner has placed the property for sale at an asking price of approximately $600,000. The city should take appropriate action to attempt to enforce the terms of the real estate contract.
Credit card purchases did not have adequate supporting documentation. Total credit card purchases for fiscal year 2003 were approximately $83,000. Several of the credit card receipts indicated the total amount paid but included no detail or explanation of what was purchased, while other purchases were not accompanied by any type of receipt.
The city's total financial obligations have increased from $88 million to $152 million or 72 percent from 1999 to 2003. A large part of this debt is certificates of participation (COPS) and revenue bonds which are not included in the various ratios used by the city to help ensure financial stability. Including this other debt in monitoring the various debt ratios would help ensure the city is maintaining adequate financial stability.
Of the 15 executive team members assigned a vehicle, 13 are assigned trucks or sport utility vehicles, most of which are four wheel drive and/or heavy duty models. It is questionable as to whether these types of vehicles are necessary to fulfill the duties of these employees. Additionally, three employees assigned trucks commute roundtrip approximately 20, 40 and 60 miles per day, respectively, and over 50 percent of the mileage put on their assigned vehicles is attributed to commuting. The amount of mileage and type of vehicles allowed for commuting these distances appears unreasonable and excessive.
In September 2003, the State Auditor's Office initiated a routine audit of the O'Fallon Municipal Court. Within a few days of starting the audit, the court administrator admitted to the misappropriation of funds. The city decided to contract with an independent audit firm to review the court records and procedures to determine the amount of loss and how it had occurred. At that time, due to the pending petition audit, the State Auditor's Office halted its audit of the municipal court. The independent audit firm reported in January 2004, that approximately $350,000 appears to have been misappropriated from the municipal court from 1997 to 2003. The misappropriation appears to have occurred because of a lack of control procedures and segregation of duties. The court administrator was terminated from her position and the city has implemented procedures to prevent such misappropriations in the future.
Also included in the report are recommendations related to attorney costs and billings, stadium and park operations, city vehicles and mileage logs, mobile communications, and public records.