Report No. 2011-106
November 2011
Complete Report
Findings in the audit of the City of Mountain Grove
Financial Condition and Monitoring
The General Fund is in poor financial condition due to operating losses of several city activities and increased health insurance costs. The city golf course lost over $100,000 in each of fiscal years 2011 and 2010, and the senior center operated at a loss of approximately $100,000 for fiscal year 2011 and $61,000 for fiscal year 2010. The city does not maintain complete, accurate, and up-to-date accounting records, so the Board of Aldermen does not receive adequate financial information to properly monitor cash balances and the financial condition of city funds. It is a concern that a city responsible for revenues of approximately $3.6 million annually for all city funds cannot produce timely basic financial reports that should be utilized regularly to manage city finances.
Budgets and Financial Reporting
Annual budgets do not contain all required elements, and the city does not publish complete, accurate, and up-to-date semi-annual financial statements, as required by state law. The Board of Aldermen does not adequately monitor budget to actual revenues and expenditures, and actual expenditures exceeded appropriated amounts for some funds, in violation of state law.
Expenditures
The city has a bid policy, but it was not followed for several purchases. The policy requires the city to advertise for bids for items or services in excess of $5,000, but the city did not advertise when it purchased chairs and tables, kitchen appliances, billiard tables, or culverts. The city needs to improve its approval process for expenditures and maintain better supporting documentation for expenditures. Vehicle mileage logs need improvement, and the city should maintain documentation to support the manner in which it allocates salaries to different funds.
Contracts and City Property
The city has entered into contracts for public services that do not adequately protect the city's financial interests by requiring the vendor to report on the services performed or provide proof of insurance. The city does not charge rent to three private entities and leases two houses to individuals for $100 and $200 per month with no written lease agreements or support for the reasonableness of the rental amounts. Additionally, the city did not solicit proposals to develop real estate owned by the city, so it cannot be sure it received the best value possible for the property.
Accounting Controls and Procedures
Receipting procedures need improvement. The city should use pre-numbered receipt slips, account for their numerical sequence, reconcile the method of payment to the composition of deposits, restrictively endorse checks immediately, and properly account for voided transactions. The city should also ensure individuals with access to city funds are bonded or insured to protect the city from loss.
Golf Course
The golf course pro shop is a private business operated on city property at city expense in violation of the Missouri Constitution's prohibition against using public funds to subsidize a private entity. The city and the pro shop have no written agreement, the business is operated with the help of city employees who do not track their time, the pro shop pays no rent to the city, and the city pays the pro shop's utilities and insurance. Pro shop receipts are commingled with the city's receipts, and the city does not receive adequate documentation of daily receipt activity. The pro shop cash register does not account for the composition of receipts and does not assign receipt or transaction numbers, making it harder to ensure all transactions are accounted for properly. The city needs to reexamine its employee discount policy related to golf course discounts. The city does not maintain accurate, up-to-date records of golf course membership dues, making it difficult to identify delinquent members.
Payroll
Payroll procedures need improvement. A golf course employee was allowed to accrue compensatory time in excess of the maximum allowed by law, police department employees are paid overtime not required by law, and two full-time city employees who perform janitorial duties for the city after business hours are not awarded compensatory time to which they might be entitled. The city does not require time sheets or maintain records of vacation and sick leave for some of its salaried employees. The city did not report the value of employee use of city vehicles as required by the IRS. Some employees are not paid in accordance with the city salary schedule.
Utility System Controls and Procedures
The city has not reviewed its water and sewer rates since 2008. Preparing a statement of costs would allow the city to determine the appropriate rate to charge to cover the cost of providing the service. Adjustments are sometimes posted to the utility system without adequate documentation of the reason for the adjustment and evidence of independent approval.
Sunshine Law
Closed meeting minutes lack sufficient detail of matters discussed, and the city should consider adopting a formal policy for access to city records.
In the areas audited, the overall performance of this entity was Poor.*
American Recovery and Reinvestment Act 2009 (Federal Stimulus)
The City of Mountain Grove did not receive any federal stimulus monies during the audited time period.
*The rating(s) cover only audited areas and do not reflect an opinion on the overall operation of the entity. Within that context, the rating scale indicates the following:
Excellent:
The audit results indicate this entity is very well managed. The report contains no findings. In addition, if applicable, prior recommendations have been implemented.
Good:
The audit results indicate this entity is well managed. The report contains few findings, and the entity has indicated most or all recommendations have already been, or will be, implemented. In addition, if applicable, many of the prior recommendations have been implemented.
Fair:
The audit results indicate this entity needs to improve operations in several areas. The report contains several findings, or one or more findings that require management's immediate attention, and/or the entity has indicated several recommendations will not be implemented. In addition, if applicable, several prior recommendations have not been implemented.
Poor:
The audit results indicate this entity needs to significantly improve operations. The report contains numerous findings that require management's immediate attention, and/or the entity has indicated most recommendations will not be implemented. In addition, if applicable, most prior recommendations have not been implemented.
Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov
