YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2005-51

July 2005

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

Numerous recording, depositing, disbursing, and reporting errors were made and not detected in the city's accounting records during 2004.  It appears the board's failure to adequately review the monthly financial statement and/or bank reconciliations contributed to these conditions.  At December 31, 2004, the city's bank accounts and fund ledgers were in disagreement and the fund ledgers' and checkbook registers' balances were incorrect.       

The city does not have a formal bidding policy.  The decision of whether to solicit bids is made on an item-by-item basis.  Only one bid was obtained for repair of the city well and chlorination control costing $11,179.  Also, bids were either not solicited or bid documentation was not retained for a mower totaling $1,450,  sewer line installation totaling $1,020, or for various maintenance and repair services totaling over $12,000.  Additionally, the city did not always have formal written agreements with companies or individuals providing services to the city.

Of disbursements tested, vendor invoices or other supporting documentation were not properly obtained and/or retained for purchases totaling over $1,400 in fiscal year 2004.  The board does not review and approve invoices or other supporting documentation before payment is made.  Although the minutes document a general reference that the financial report/disbursements are approved, a listing of all disbursements is not prepared to accompany the minutes.  Also, the city has not established adequate procedures to ensure duplicate payments are not made, as invoices are not always marked paid.  

The city does not periodically perform a formal review of the adequacy and reasonableness of its water and sewer rates.  There is no documentation to support how the water and sewer fees were calculated or how much money is necessary to meet future repairs and replacement costs.  

Also included in the report are recommendations related to accounting procedures, budgeting, planning and financial reporting, minutes, meetings, and city ordinances, payroll and personnel matters, and capital asset records.

Complete Audit Report