YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2006-40

June 2006

The following findings were included in our audit report on the City of Battlefield, Missouri.  

Payments totaling $4,429 were paid to former Mayor Heslep for administrative fees related to the Federal Emergency Management Agency (FEMA) grant received by the city after the May 2003 tornado.  The Board of Alderman approved paying the administrative allowance to the Mayor in a June 2003 meeting.  While the former mayor signed a certification indicating that documentation of the administrative expenditures was maintained, neither the former mayor nor the city maintained documentation required to show how the administrative allowance was expended for eligible purposes.  Additionally, the payments were not reported by the city for payroll tax purposes, and handling the transaction in this manner may have violated state laws.  

No documentation was available to indicate that the city solicited proposals for engineering ($68,700), legal ($25,000), and auditing ($3,500) services for the year ending June 30, 2005.  Additionally, the city has not updated their contract with the engineer since June 2001 and has been paying higher hourly rates for services than are specified in the most recent contract.  Furthermore, invoices submitted by their city attorney reflected an hourly billing rate increase from $100 to $120 in August 2004; however, the ordinance establishing this increase was not approved by the Board until September 2005.

The city needs to improve the controls and procedures used to approve invoices for payment.  Credit card receipts or other documentation of fuel purchased by each city employee is not always retained, and some monies were spent for items that do not appear to be a prudent use of public funds.

Serious weaknesses were identified in the city's accounting of sewer billings and receipts. The city implemented a new sewer software accounting program in November 2005 and has not obtained the proper training and expertise to adequately track and reconcile sewer accounts receivable activity.  Reports generated from the program that were reviewed and approved by the Board of Alderman did not contain sufficient detail, and did not appear accurate.  Additionally, reports of sewer collections, and delinquent sewer accounts did not agree with other reports generated for the same time period.  Further, some information from the sewer accounting system has not been properly backed up resulting in some of the historical detailed information being lost.  As a result of these serious weaknesses, the city has no assurance that amounts billed and collected have been accounted for properly.

Documentation is not maintained to support the allocation of expenses between the sewer, park, and general funds.  In addition, the city has not established a separate accounting of some restricted revenues, such as motor vehicle-related revenues from the state and transportation sales tax revenues. Further, the city does not have procedures in place to ensure fees assessed to developers are collected prior to the Board of Alderman approving the development.

The June 30, 2005 ending balance reported in the published financial statement did not agree with the city's audited financial statements and the city's accounting records.  The balance reported in the city's published financial statement was understated by approximately $250,000.  Also, the city does not effectively monitor the annual budget, and budget amendments are not prepared and approved timely.

The Municipal Division collected approximately $50,000 during the year ended June 30, 2005.  Monies collected by the municipal division are not deposited on a timely basis and deposit slips are not always properly itemized to indicate the amount of cash and checks being deposited.  Additionally, the Court Clerk  does not maintain a bond ledger and does not prepare monthly listing of liabilities.  An accounts receivable ledger, balance due docket, or other summary listing is not maintained, and reviewed by the Municipal Judge on a periodic basis.  Furthermore, monthly disbursements of Crime Victims Compensation (CVC) fees to the state were not always remitted on a timely basis. 

Also included in the report are recommendations related to accounting controls, payroll and personnel matters, board meeting minutes, and city assets.

Complete Audit Report