YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2005-81

November 2005

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

The city needs to better monitor and manage its park project.  Although the project was expected to be completed in December 2004, no major components of the project are finished.  In spring 2004, the city received three grants totaling almost $422,000 from the Platte County Parks and Recreation Grant Program for a new city park complex.  The city was expected to provide approximately $120,000 in matching funds.

The city's approved grant applications included estimated completion dates for significant project components.  However, as various events delayed the project, the city did not develop revised timelines/completion dates or evaluate how the delays affected the various components of the project.  Starting in April 2005, the city focused its efforts solely on finishing the baseball field and estimated the field would be completed in fall 2005.  It is unclear when or if other components of the project will be started and completed.

Additionally, the estimated costs per the grant agreements have not been updated based on subsequent events.  The estimated costs to finish the baseball field have increased by approximately $45,000.  This cost overrun may affect whether other components of the project can be completed as intended.  Because the city was not tracking actual costs or timelines, the city purchased some items, such as the shelter house, playground equipment, and stadium seats, which cannot be used until other work is completed.  However, it is unclear if funds will be available to complete all park components as planned.  Also, the city's budget needs more detail to adequately monitor estimated and actual project costs.

The city recently reduced the work hours for its water/sewer employees; but, the reductions were not based on documented performance expectations.  As a result of the reductions, the city decreased its budgeted personnel costs in 2005 by over $47,000.  However, it is unclear how the current work activities and accomplishments compare to the prior activities or if the reduced hours will be sufficient to accomplish everything the city expects.

The method of allocating the City Clerk's and the water/street employees' wage expense to the city's funds is not supported by documentation.  Additionally, the city needs to contact the Internal Revenue Service for guidance regarding the reporting of life/health insurance

payments to employees and the city's contribution to the employee's deferred compensation plan and the payment of applicable taxes.  Also, the city has not established an ordinance for employee compensation or the term of office for the City Clerk as required by state law.

The city needs to monitor the declining cash balance in the Street Fund.  In both 2004 and 2003, the expenditures from the fund exceeded the revenues, and the cash balance declined to approximately $39,000 at December 31, 2004, a $60,000 decrease from December 31, 2002.  Further, although the city has incurred a significant amount of debt which will have an impact on the financial condition of the Water and Sewer Fund, the city has no formal plan to address the repayment of this debt.

Also included in the report are recommendations related to budgeting, planning, and financial reporting, accounting controls and procedures, public records and meetings, and capital asset records.

Complete Audit Report