YELLOW SHEET

Office of the State Auditor of Missouri
Claire McCaskill

August 8, 1999
Report No. 99-50

Some problems were discovered as a result of an audit conducted by our office in response to the request of petitioners from the Village of New Melle, Missouri.

In 1998, New Melle operated ten months without an approved budget; it was not until October 1998 that the village's budget went into effect. In addition, as of March 30, 1999 the village budget for fiscal year 1999 had not been approved. Missouri state law requires governments to operate from approved budgets.

In addition to meeting state law requirements, a complete and well-planned budget can serve as a useful management tool by establishing specific cost and revenue expectations for each area of the village operations and provide a means to effectively monitor actual costs and revenues. It will also assist informing the public about the village's operations and current finances.

Funding for the Community Oriented Policing Services (COPS) grant program was to end in June 1999. The village has not documented a plan to address this significant reduction of revenues.

The village inaccurately reported disbursements on the quarterly Financial Status Reports to the COPS program, incorrectly paid officers who were not a part of the program to cover leave time, and requested more money than needed for disbursements each month through the COPS program. As a result, at December 31, 1998, federal reimbursements of $23,103 have been questioned.

In 1998, New Melle contributed $3,653 to an Individual Retirement Account (IRA) for five police officers, instead of participating in the state approved retirement program (LAGERS) Missouri Local Government Employee's Retirement System. The village is prohibited by state law from establishing its own retirement plan. We recommend the Board of Trustees review the legality of the village's retirement plan.

New Melle has one person serving as Village Clerk and Village Treasurer. This person's duties include making bank deposits, maintaining receipt and disbursement records and preparing financial reports. In addition, there is no independent review of the clerk's work.

Holding both of these offices does not allow the separation of duties necessary for a proper evaluation and review of financial transactions and jeopardizes the system of independent checks and balances intended by state law.

The village did not have formal written agreements with some companies or individuals providing services such as the Village attorney and accountant. We noted several checks payable to cash totaling $1,600. According to the City Clerk, the cash was used for gas for patrol cars. The village responded that in mid-1998 it issued credit cards for gasoline purchases and the practice of using petty cash was discontinued.

New Melle has not established a separate accounting for motor vehicle-related receipts, law enforcement training fees, and judicial education fees to ensure these funds were spent in accordance with applicable laws and regulations.

The municipal court division does not issue receipt slips for some monies received. Monthly listings of open items (liabilities) are not regularly prepared and reconciled to the bond account cash balances. Municipal summonses are not properly accounted for by either the police department or New Melle's municipal court division. The Court Clerk, who is also the Village Clerk, performs the duties of receiving, recording, disbursing, and depositing monies.

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