Auditor Seal


Office of the State Auditor of Missouri
Claire McCaskill

Report No. 2006-03

January 2006


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

The city of Excelsior Estates is in poor financial condition and appears to be subsidizing the Sewer Fund with restricted receipts.  The city's cash balance has declined over the past several years, and at December 31, 2004 was $1,259.  Liabilities to the Mayor exceeded $2,700 for unreimbursed expenses and services provided by a business owned by the Mayor.   In addition, $32,000 in delinquent sewer billings has not been collected and significant legal costs were incurred to file lawsuits to collect on these accounts.  Significant unplanned repairs and improvements were required to the sewer system during 2004 to settle a lawsuit with the Attorney General's Office, which also impacted the city's financial position. 


The city has not established a fund accounting system, but rather accounts for most activity from one bank account, which combines the General, Sewer, and Street Funds.   As a result, the city is unable to determine if receipts for each fund are sufficient to fund like operations.  The sewer fee was increased from $15 to $30 per month in August 2004, but it is unclear if this increase was adequate, due to the lack of record keeping. 


The mayor engaged in activities which appear to be conflicts of interest and a former board member was paid to fill in as City Clerk.  The city borrowed $1,500 from a company owned by the mayor and paid a company owned by the mayor over $2,500 to perform various sewer and flood control projects during January 2005.  Documentation was not maintained for quotes solicited from other lending institutions and the sewer work was not bid until February 2005.


Monthly financial reports presented to the board are in need of improvement.  While the mayor has improved these reports since taking over in April 2004, the reports currently prepared are not always complete and are not presented to the board for review or approval.  The Mayor serves as the City Treasurer and beginning in March 2005 was responsible for most record keeping duties of the city, but no review of the work performed by the mayor was done by an independent person.  


Receipt slips are not issued for some monies received, checks and money orders are not restrictively endorsed immediately upon receipt, some city officials with access to cash are not bonded, and bank reconciliations are not performed monthly.


The board minutes do not normally contain indication of board approval for disbursements and the board does not normally review invoices before payment.  In addition, the Mayor has been purchasing items for the city with his personal funds, without board approval, and then requesting reimbursement.  From January 2004 through May 2005, the Mayor requested reimbursements totaling approximately $5,300.  Additionally, the city does not have a formal bidding policy, or formal written agreements with some companies and individuals providing services.


The cost study prepared by the mayor to support increasing the sewer fee shows the proposed sewer rate would not be sufficient to fund the estimated sewer system costs.  While costs were estimated at approximately $34,000, the cost study only estimated receipts at $27,600.  The board had not followed adopted ordinances related to sewer late fees or disconnections.  While delinquent sewer bills total over $30,000, no disconnections have been performed, as required by city ordinance. Additionally, the city does not perform monthly reconciliations of total billings, payments received, and delinquent amounts for sewer services, which would help ensure accounting records balance, transactions have been properly recorded, and errors are detected and corrected on a timely basis.     


Also included in the report are recommendations related to budgets and financial reporting, restricted revenues, meeting minutes and ordinances, and street maintenance.


The mayor and board believe that the city is in excellent financial condition given their recent challenges.  They provided explanations and reasons for some audit findings, but failed to produce documentation supporting some of their contentions.  Additionally, there were several issues to which the board simply chose not to respond.



Complete Audit Report

Missouri State Auditor's Office