Report No. 2010-64
Complete Audit Report
The following findings were included in our audit report on the City of Richmond.
The methods used to determine the allocations of salaries and various overhead costs to the city's Water, Waste Water, and Solid Waste Funds (Enterprise Funds) are not reasonable. Administrative transfers totaling $253,444 were made from the Enterprise Funds to the General Fund for salaries and related expenditures during the year ended September 30, 2008. Documentation of time spent related to Enterprise Fund activities does not exist to support the allocation. Additionally, for the year ended September 30, 2008, transfers totaling $115,197 were made from the Enterprise Funds to the General Fund for a portion of administrative and overhead costs such as contractual services, materials, and supplies. These costs are allocated similarly to the salaries and fringe benefits, rather than determining the amount of time spent performing these functions or the actual usage of materials and supplies by the Enterprise Funds. None of the salary or other overhead costs are allocated to non-enterprise funds of the city. Furthermore, the city has not been allocating an occupancy cost for the allocable portion of the municipal complex to the various city departments and funds.
While the City Finance Director was able to provide rate studies prepared in the summer of 2007 to support the increases in water and sewer rates, she was unable to provide documentation as to how some of the amounts were calculated. Capital improvement sales tax monies were also not accounted for properly.
The city's procedures for maintaining bid documentation need improvement. The city was not able to locate original bid documentation for the Wellington Phase Two project ($531,000) and documentation was not maintained to support the assessment of proposals submitted for landscaping of the new municipal complex. It is unclear how the city decided among the three designs submitted. The city did not ensure adequate documentation was obtained to support some expenditures, and the city purchasing policy does not address if change orders on construction projects require approval by the City Council. The city's procedure is to have the Mayor approve change orders on construction projects. The Mayor did not approve three of five change orders, totaling approximately $10,600, on the Wellington Phase One project until the work was already completed and the final payment requested. Change orders totaling approximately $600,000 on the municipal complex project were not approved by the City Council, increasing the cost of the project significantly. Bids were not solicited, as required by state law, for services performed for the city by former Mayor Green and Councilman Williams. In addition, the city did not always have formal written agreements with companies or individuals providing services to the city.
The City Collector has the ability to record customer utility account adjustments without any independent review or approval. The city does not perform monthly reconciliations of total billings, payments received, and amounts remaining unpaid for water and sewer services. Although reconciliations are prepared by the City Collector comparing the total gallons of water billed to customers to the total gallons of water pumped, there is no documentation the city investigated and resolved significant differences calculated in this comparison. Additionally, the Collector does not always deposit receipts on a timely basis and both the Fire Department and the Police Department maintain funds generated from fundraisers and special events in bank accounts outside the city treasury.
The City Council approved a deficit budget for the Municipal Complex Fund for the year ended September 30, 2008, and for the Municipal Complex Fund and General Revenue Fund for the year ended September 30, 2009. The City Council does not adequately monitor spending by periodically comparing actual expenditures to budgeted amounts, resulting in significant overspending in several city funds.
Closed meetings and committee meeting minutes were not always handled in accordance with state law. Meeting minutes were not sufficient to demonstrate how some issues discussed in closed meetings were allowable under the Sunshine Law. Minutes are not taken of meetings of city affiliated committees, including the Finance Committee, Ordinance Committee, Public Works Committee, and Public Safety Committee.
There is no documentation to support how city vehicle allowances were determined. Vehicle allowance payments totaling $10,130 were made to the City Council, Mayor, City Administrator, City Clerk, and Recreation Director during the year ended September 30, 2008. In addition, controls over fuel usage are not adequate. Departments do not compare fuel purchased to records of miles driven for department vehicles and controls over use of gasoline and diesel fuel stored in bulk tanks need improvement. Furthermore, the city has no procedures in place to ensure all employees who operate city vehicles have valid driver's licenses.
Fire Department employees receive a salary and are paid bi-monthly but are not scheduled to work a set number of hours during each pay period, which resulted in inequitable pay for some Fire Department employees. We also indentified instances where overtime was paid to Fire Department employees when not required by the Fair Labor Standards Act (FLSA). The city pays firemen $2 per hour for on-call hours; however, it is not clearly documented in the city personnel policy.
Other findings in the audit report relate to Police and Animal Control Departments accounting procedures and capital assets.
Complete Audit Report
Missouri State Auditor's Office