Auditor Logo Susan Montee

Report No. 2010-100
August 2010

Complete Audit Report


Findings in the audit of the City of Clarksville


Financial Condition
The financial condition of the General Fund has declined significantly during the last 3 years. The city cannot continue to spend more than it receives. Additionally, the Board is not receiving adequate financial information. The financial reports presented to the Board need greater detail for the Board to properly monitor the financial condition of the city's various funds. Although the Mayor indicated the city is aware of the deteriorating condition of the General Fund, the city has not developed a formal plan to address the city's financial condition or specific plans to reduce expenditures and/or increase revenues.

City Collector
Significant weaknesses were identified in the controls, records, and procedures over the property tax system. As a result, there is less assurance that all property tax monies have been handled and accounted for properly. The duties performed by the City Collector are not adequately segregated, and there is no independent review of the City Collector's controls, records, and procedures. The City Clerk does not perform an independent review of the tax book information or totals to ensure they are correct, or charge the City Collector with the amount to be collected. The City Collector does not maintain an account book, reconcile the total assessed valuations recorded in the city's tax books to the assessment list prepared by the Pike County Assessor, or recalculate tax statements on a test basis to ensure the tax was accurately extended. The tax statements are not adequate. The City Collector posts additions and abatements to the tax books without Board review and approval, and does not prepare appropriate reports for the Board as required by state law. A detailed annual report is not prepared, an annual list of delinquent taxes is not always prepared, and the monthly report to the Board does not include a list of delinquent tax collections by year. Additionally, the city does not adequately pursue collection of delinquent taxes, and the City Collector does not maintain a list documenting the residents who purchased automobile stickers, the relevant sticker number issued, and delinquent residents.

Utility Policies, Procedures, and RecordsUtility Policies, Procedures, and Records
There are significant weaknesses in operations related to water, sewer, and trash services. As a result, there is less assurance utility monies are handled and accounted for properly. Reports reconciling total gallons of water billed to gallons of water pumped were either not prepared or not retained for several months in 2009. Delinquent accounts are not handled in accordance with city policy and ordinances. Some customers are allowed to make partial payments without Board approval. Although some adjustments may be necessary to correct inaccurate billings, the utility clerk has the ability and authority to record credit adjustments to the computer system without documenting each adjustment or obtaining approval. The city did not retain adequate documentation to support estimated readings and manual bills prepared when the utility system crashed in November 2008. In addition, the accounts were not reconciled with subsequent actual readings. The trash rate charged to customers is not set by ordinance, and does not cover the cost of the service.

Expenditures
Although the city has a purchasing policy for the purchase of goods and services, the policy does not state when Board approval is required for items bid or the type of documentation to be obtained or retained. Bids and/or proposals were either not solicited or bid documentation was not retained for several purchases during the year ended June 30, 2009. Purchase orders are not always obtained, two signatures on checks are not always used, and Board approval of expenditures is not always retained.

Controls over Revenues
As a result of not issuing receipt slips for all monies received and not consistently recording the method of payment, the composition of receipts cannot be reconciled to the composition of deposits. In addition, monies are not deposited on a timely basis, and checks and money orders are restrictively endorsed when a deposit is prepared rather than immediately upon receipt. Additionally, the city does not examine or inspect the books and records of hotels/motels to ensure all tourism taxes due are collected, and some entities may not be submitting quarterly tax reports to the city as required. As a result, there is no assurance the city is maximizing revenues generated from the tourism tax.

Tax Increment Financing
There are significant weaknesses regarding the city's management and oversight of its Tax Increment Financing (TIF) district. The city did not ensure there was an active TIF Commission to control and finish the TIF project on a timely basis. According to city officials, the TIF Commission has not been active for many years. Also, city officials state that the 2008 flooding of the downtown area disrupted efforts by the city to work on the project. As a result, the TIF project has not been completed and funds have not been received or expended as originally intended.

FEMA Grant
A flood in June 2008 caused extensive damage in the city. As a result, the city qualified for federal disaster relief funds from the Federal Emergency Management Agency (FEMA); however, the FEMA monies were not accounted for properly. These monies were not maintained in a separate fund and as a result, the city has not adequately accounted for FEMA monies received but not used and may have used water and sewer funds for general city operations. The city has not contacted the State Emergency Management Agency to request approval for an extension of time to complete some projects.

Other Findings
Other findings in the audit report relate to budgeting, financial reporting, meetings and minutes, and capital assets.

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