Report No. 2007-14

March 2007

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

Many of the findings in this audit are similar to those included in our previous audit of the City of Novinger (Report No. 2000-84).  Very little progress has been made to improve overall accountability over city resources.

For the year ended June 30, 2006 the city collected approximately $91,450 for water, $29,590 for sewer, and $26,230 for trash services.  The city does not compare or reconcile gallons of water purchased to gallons of water pumped from the city's water tower, and does not reconcile gallons of water pumped to gallons billed to customers.  According to city records, the city purchased approximately 10,555,000 gallons of water, but only billed customers for approximately 8,000,000 gallons.  In addition, the city does not maintain adequate records of water and sewer refundable meter deposits held in the Water and Sewer Funds.  There is no complete list of deposits held by the city and the total amount of meter deposits from city residents cannot readily be determined.

The collector does not prepare a detailed annual report of collections and delinquent accounts for the board as required by state law.  The collector does prepare a monthly report of collections, but it is not presented to the board for review.  Without such a report, any errors or irregularities that might occur are likely to go undetected.  As of June 30, 2006, the city had approximately $3,350 in delinquent utility bills due from citizens no longer living within city limits.

The city�s combined waterworks and sewerage system bond covenant requires that amounts be set aside into a Bond Reserve Fund and a Replacement and Extension Fund with the aggregate amount totaling $16,000 for each fund.  The city has two certificates of deposit designated as �Water and Sewer Bond Reserve�; however, at June 30, 2006, these certificates totaled only $8,836.  The city has not made any deposits to this fund during the current fiscal year.  In addition, the city has not had annual audits of its water and sewer system as required. 

The city does not have written contracts for accounting or legal services indicating the services to be provided at what amount.  During the year ended June 30, 2006, the city paid approximately $10,150 to the accounting firm and $700 to the attorney.  While the August 2005 minutes indicate that the attorney was hired at a rate of $80 per hour, no formal written agreement was prepared.   

The city does not have a formal written bidding policy.  City officials indicate they frequently obtain proposals or quotes over the telephone.  While the city board minutes showed some evidence of bidding for water tower repairs and accounting services, no documentation was maintained of the bid amounts or documents received, nor of the justification for selecting and rejecting the bids.

The city does not have a policy regarding the usage of credit cards and lines of credit.  In addition, the city does not maintain mileage/usage or maintenance logs for vehicles and equipment owned by the city.  Also, several payments were processed without an invoice or other adequate supporting documentation, including the purpose of the disbursement. 

As noted in our prior audit report, the city received a restrictive donation of $44,633.  The monies were used for general operations of the city.  As of June 30, 2000, $31,133 and $13,500 were due to the Garrison Fund from the General Fund and the Water Fund, respectively.  As of June 30, 2006, the Garrison Fund Savings Account had a balance of $3,225.  Based on available documentation, as of June 30, 2006, the city needs to transfer $27,908 from the General Revenue Fund and $13,500 from the Water Fund into certificates of deposit in accordance with the provisions of the Garrison Estate.  The city should review this situation with legal counsel to determine if there are other methods of handling this donation.

The city has not established a separate accounting for the motor vehicle related revenues to be used for street related purposes as required by the Missouri Constitution.  The city deposits all motor vehicle-related revenues into the General Fund.  For the year ended June 30, 2006, motor vehicle related revenues totaled approximately $22,000. 

A budget for the year ended June 30, 2006, was not prepared and adopted by ordinance as required. The city has not published semi-annual financial statements nor submitted an annual financial report to the State Auditor's office as required by state law.

Also included in the report are recommendations related to accounting controls and procedures, payroll, meeting minutes and ordinances, capital assets, volunteer fire association, water, sewerage and street maintenance plans, allocation of salaries and expenditures between funds, and administrative costs of trash services.

Complete Audit Report