Report No. 2011-32
July 2011
Complete Report
Findings in the audit of the City of Lowry City
Utility Policies, Procedures, and Records
The city has not reviewed its water and sewer rates for several years and has not prepared a statement of costs to help determine if it is charging appropriate rates. The city is less likely to detect errors, theft, or misuse in the Water and Sewer Fund because the city does not perform monthly reconciliations of the utility amounts billed, collected and unpaid, and the City Treasurer is able to post adjustments without independent approval. The city was not adequately managing delinquent accounts; service was not discontinued upon non-payment, and the monthly delinquent account reports were not provided to the Board of Aldermen or maintained by the City Treasurer. Refundable utility deposits were not properly tracked and reconciled to the appropriate bank account. The City Treasurer calculated the amount of utility deposits paid as of January 6, 2011, to be $18,855, but the city only had $16,300 in bank accounts designated for utility deposits.
Restricted Funds
The city allocated expenses between restricted funds without adequate documentation of the justification. For example, City Treasurer wages were split evenly between the General Fund and the Water and Sewer Fund, but there is no record of how many hours the City Treasurer spent working on each city service or how this allocation was determined. The Police Fund has accumulated an excess balance of Law Enforcement Training fees.
Accounting Controls and Procedures
The city does not always issue prenumbered receipt slips for monies collected, which makes it difficult to ensure all monies are accounted for properly. The city maintains fuel tanks, but fuel use is not reconciled to fuel purchases to ensure fuel costs are reasonable. Some disbursements lacked adequate supporting documentation, including $370 in 2009 and $570 in 2010 paid to the Fire Chief to pay volunteer firemen for attending each monthly meeting and $200 paid to the City Clerk for a copy machine. Neither the Mayor nor the Mayor Pro Tem are bonded even though they can sign checks written on city bank accounts.
Property Tax System Controls and Procedures
The city should improve controls with respect to the property tax process. A detailed annual report of property taxes is not presented to the Board of Aldermen. The City Collector does not maintain an account book and did not prepare a list of delinquent taxes for approval by the Board of Aldermen until November 2010.
Payroll Issues
The city did not properly report wages, withhold employee payroll taxes from, or pay the employer's share of payroll taxes on property tax commissions retained by the City Treasurer/Collector. The Board of Aldermen approved and paid $150 bonuses to each full-time employee in December 2010 and 2009 in violation of the Missouri Constitution's prohibition against the payment of additional compensation to public officers for services previously rendered.
Audits, Budgets, and Financial Reporting
The city has not obtained required annual audits of its water and sewer systems, and budgets are missing required elements.
Minutes and Ordinances
Open meeting minutes did not always document a permissible reason for closing meetings or a roll call vote to go into a closed meeting. City ordinances are not complete, up-to-date, and sufficient, and the city is not complying with some ordinances. The city should adopt ordinances setting employee compensation and the term of office and duties of the City Clerk, property tax rates, penalties for delinquent taxes, and procedures regarding utility collections. Also, the City Collector retains 4 percent of property taxes collected, but the ordinance only authorizes the City Collector to retain 2 percent.
In the areas audited, the overall performance of this entity was Fair.*
American Recovery and Reinvestment Act 2009 (Federal Stimulus)
The City of Lowry City did not receive any federal stimulus monies during the year ended June 30, 2010.
*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
