Auditor Seal

YELLOW SHEET

Office of the State Auditor of Missouri
Claire McCaskill

Report No. 2006-78
December 2006

The following findings were included in our audit report on the city of Moscow Mills, Missouri.


The city of Moscow Mills is in poor financial condition as a result of overspending, inadequate oversight and improper budgetary practices.  The budgeted disbursements for the General Fund for the year ended December 31 2006, exceed budgeted receipts by approximately $117,796, resulting in an estimated balance of only $10,000.  The Board receives a budget to actual report each month prior to the board meeting, but the board minutes do not indicate any discussion of this report.

Moscow Mill's financial obligations have risen significantly over the last several years.  From 2004 to 2005 the overall financial liability of the city has increased approximately 222 percent from $2.3 million to $7.5 million.  This has led to an increased level of liabilities per capita.  Most of this debt was used to finance expansion of the city’s water and sewer system.  The city should develop a debt policy for monitoring various debt ratios which would help ensure the city is maintaining adequate financial stability.

During the year ended December 31, 2005, actual disbursements exceeded budgeted amounts in the Waterworks Fund by $31,248, and the Debt Service Fund by $240,298.  In addition, a budget was not prepared for the Project Fund, which was established in December 2005.  Approximately, $1,737,980 was disbursed from this fund in 2005.  The Board of Aldermen significantly overestimated the disbursements of the Water Repair and Replacement Fund and the Sewer Repair and Replacement Fund, when preparing the 2005 budget.  Also, the city's 2005 budget and semi-annual published financial statements did not include the city’s indebtedness as required by law.  

The city has not prepared an annual maintenance plan for city streets or otherwise informed the taxpayers of the city's intended use of the balance of the Street Fund, other than the budget.  The Street Fund balance at December 31, 2005, was approximately $369,690, while disbursements for the fiscal year totaled only approximately $107,500.  The majority of these disbursements were for street lights and administrative expenses.

In 2005, the City received approximately $917,600 in water, sewer and trash fees. The city does not reconcile the total gallons of water billed to customers to the gallons of water pumped.   The gallons of water billed in December 2005 were 28 percent or 1,343,192 gallons less than the gallons of water pumped.

The City has not formally identified and documented any other costs, such as administrative costs, related to trash service.  Trash service receipts are deposited into the

Waterworks Fund and disbursements are made monthly from the fund for trash services.  The city retains a percentage of the trash fees collected.  Trash fees should be set at a level to cover the cost of providing a particular service and should not be used to supplement other services of the city. 

The Board of Aldermen does not review and approve the payment of city expenditures prior to the checks being issued.  A financial report is prepared monthly by the City Clerk which includes a detailed listing of all disbursements by fund; however, the disbursements represent the preceding month’s activities.

Some disbursements do not appear to be a prudent use of public funds including purchasing flowers and plants for funerals and an annual Christmas party.  In addition, the Board of Aldermen approved bonus payments to the full time city employees.  The minutes indicate this was a "one time pay increase"; however, the employees monthly salaries did not increase.  These bonuses appear to represent additional compensation for services previously rendered and, as such may be in violation of the Missouri Constitution and an Attorney General's Opinion.

The city has a credit card used to make miscellaneous purchases.  Adequate supporting documentation was not submitted or retained for some charges, including hub caps, and software updates.  Also, acknowledgment of receipt of goods or services is not documented on some invoices. Finally, the city pays $2,000 yearly to a not-for-profit organization that supplies transportation to the elderly and handicapped without entering into a written contract as required by state law.

Also included in the report are recommendations related to board minutes, city policies, vehicles and equipment, accounting controls and procedures, petty cash funds, payroll allocation, capital assets, and the municipal court.

Complete Audit Report


Missouri State Auditor's Office
moaudit@auditor.mo.gov