Report No. 2009-98
September 2009
Complete Audit Report
The following findings were included in our audit report of the City of Niangua.
Between January 1, 2006, and February 29, 2008, at least $25,606 was received but not deposited into city accounts. Cash is missing from city accounts in several different ways. Some cash payments of water and sewer bills were received and recorded by the former City Clerk but not deposited. Checks received were sometimes not recorded and substituted into deposits for recorded cash receipts that were not deposited. Late fees and reconnect fees paid by customers were not always recorded as charged or received, and remain unaccounted for. Additionally, instances were noted where cash receipts were posted as an adjustment to reduce the customer's water and sewer bill, but the cash receipt was not recorded or deposited. Other credit adjustments during this time period also appear questionable and some receipt records were not retained; therefore, additional funds may be missing.
Six checks totaling $3,246 were issued to the former City Clerk's mother during 2007 with no documentation to support the purpose of these checks. Five checks totaling $2,583, issued to the former City Clerk, appear to be unauthorized payroll checks written outside the normal payroll period. Additionally, checks totaling at least $3,113 were issued to petty cash without supporting documentation. After an investigation by law enforcement, the former City Clerk pled guilty to four counts of forgery. No charges have been filed relating to the missing cash receipts.
The lack of adequate controls and the absence of proper oversight by the Board of Aldermen allowed missing funds to go undetected. Controls, such as adequately segregating the duties of the City Clerk or providing adequate supervision, are not in place. Additionally, controls over the recording of city receipts are poor, and adjustments posted to customer's water and sewer accounts are not always properly authorized or adequately documented.
Controls over city disbursements are also not adequate. Supporting documentation was not retained for most disbursements prior to February 2008, and the Board does not adequately document its review and approval of city disbursements. A facsimile stamp of the Mayor's signature was not adequately controlled and was used as a signature on some checks. The city does not have bond coverage for the two Board members authorized to sign checks. The city failed to pay some invoices timely resulting in interest and late charges assessed against the city. Additionally, the city has not established formal bidding or purchasing policies, and does not adequately track fuel purchases and mileage. Further, the city could not provide documentation of compliance with grant requirements related to the purchase of a police car.
City payroll transactions were not adequately reviewed by the Board of Aldermen. Federal payroll taxes totaling $15,481 were not paid by the city during 2007 and 2006. As a result, the IRS froze the city's bank accounts in February 2008 until the taxes, plus $1,404 in interest, were paid. Payroll tax reports and city payroll records were not properly reconciled to Forms W-2 and W-3 resulting in some wages not being reported for 2008. Additionally, the city does not maintain personnel files and should consult with legal counsel on the proper method of compensating reserve officers.
Monies received and disbursed by the city are not properly allocated to city funds. The method of allocating wages and benefits paid to city employees is not reasonable, and a number of restricted accounts appear to have been used for improper purposes.
The city's water deposit bank account is at least $7,800 short when compared to the computer list of customers with paid water deposits on hand. Additionally, there id no documentation the Board of Aldermen investigated and resolved significant differences between total gallons of water billed to customers and total gallons of water pumped. Further, water and sewer rate increases are not supported by documentation of how the increases are calculated, some fees charged are not set by ordinance, and some customers are not properly charged some fees.
The audit identified several weaknesses regarding financial reporting and budgetary practices. In addition, the city maintains an excessive number of bank accounts and should consider reducing the number of accounts to simplify recordkeeping.
Improvement is needed in the procedures and documentation related to closed meetings. Additionally, board meeting minutes are not signed, and open board meeting minutes for 6 months during 2007 could not be located.
Other findings in the state audit report relate to capital assets and traffic ticket accountability.
Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov
