Report No. 2009-93
September 2009
Complete Audit Report

The following findings were included in our audit report of the City of Iron Mountain Lake and the Twenty-Fourth Judicial Circuit, City of Iron Mountain Lake Municipal Division.

At least $12,968 received for sewer payments, fees, and court fines and costs, was not deposited and appears to be missing, and additional monies could be missing.

Poor controls, records, and procedures allowed the missing cash receipts to go undetected. Cash custody and recordkeeping duties are not adequately segregated. Receipt slips are not issued for some monies received, no one accounts for the numerical sequence of receipt slips issued, and the composition of receipts is not reconciled to the composition of deposits. Formal bank reconciliations are not performed. Some receipts and disbursements are not properly recorded in the check register, and as a result, an accurate balance is not maintained. Some monies received are not deposited intact or in a timely manner and the change fund is not maintained at a constant amount.

The city does not have a formal bidding policy and does not solicit bids for city purchases. Some invoices are not marked paid or otherwise canceled upon payment. Invoices did not include documentation of receipt of goods and/or services, and some disbursements did not appear to be prudent uses of taxpayer monies.

Payroll records and procedures are not adequate and are in need of improvement. Payroll duties are not adequately segregated and a supervisory review of the payroll ledger and payroll checks is not performed. It is unclear whether two individuals paid by the city were employees of the city or contract employees. The city did not withhold payroll taxes from payments to the two individuals hired, nor were the payments reported to the IRS. The Police Chief purchased a computer with city monies to perform city work at home. This disbursement was to be reimbursed to the city through payroll deductions, resulting in the city providing an interest-free loan on the personal purchase. In addition, when the Police Chief resigned in July 2008, he did not return the computer to the city and approximately $1,000 remained due to the city as of March 31, 2009, per the former Police Chief. Timesheets prepared by employees are not consistently signed by a supervisor, and employee withholding forms (W-4s) were not on file for some employees.

The city has not established procedures to ensure restricted revenues are expended only for the intended purpose and disbursements are properly allocated among funds.

The Board of Aldermen meeting minutes are prepared by the City Clerk and approved by the Board at the following meeting; however, the minutes are not signed. In addition, the city ordinance regarding public access to records needs to be updated.

The city has not submitted annual financial reports to the State Auditor's office since 2005, and an annual audit of the sewer system has not been performed for the past several years. The former City Clerk prepared separate financial reports for the City Operations Account and the Sewer Account for the Board of Aldermen; however, these reports were not complete or accurate.

The city has not established formal policies and procedures for capital assets, including procedures for an annual physical inventory. The city does not maintain complete and current records for its capital assets including land, buildings, vehicles, equipment, and furniture. Also, property is not tagged for specific identification, and an annual physical inventory is not performed.

Controls and procedures for the handling of court monies are in need of improvement. Cash custody and recordkeeping duties have not been adequately segregated. The City Clerk/Court Clerk does not file a monthly report with the city of all cases heard in court, as required by state law. Crime Victim's Compensation and Peace Officer Standards and Training Commission fees are not turned over to the state monthly in accordance with state law, and the city has not established ordinances authorizing the fees. The posted schedule of fines and court costs to be assessed and collected at the Violation Bureau has not been updated to indicate the current amount of fines and court costs. A bond ledger is not maintained and a monthly list of liabilities is not prepared and reconciled with bonds held in the City Operations Account. Neither the police department nor the municipal division maintain adequate records to account for tickets assigned and issued, and their ultimate disposition.

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