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YELLOW SHEET Office of the State Auditor of Missouri |
September 12, 2002
Report No. 2002-88
The following problems were discovered as a result of an audit conducted by our office of the Metropolitan St. Louis Sewer District.
Significant weaknesses were noted in the district's billing and collection policies, procedures and records.� At June 30, 2001, the district had over 38,000 accounts with a total amount delinquent of approximately $34 million, including delinquencies dating as far back as 1981.� In addition, the district wrote-off over $2.7 million in delinquent charges deemed not to be collectable during fiscal year 2001.� Written policies and procedures outlining specific steps and criteria to be followed for billing and collection activities have not been developed.� Adjustments to customer accounts are not always properly authorized, the supporting documentation for adjustments is not sufficient, and controls over adjustment authorization forms need to be improved.� In addition, significant adjustments are not reported to the Board of Trustees.
The district had significant problems with the management of its Real Property Acquisition and Relocation Assistance (buyout) Program for the Ashland Abner neighborhood in the City of St. Louis.� The district needs to improve it procedures for managing the buyout program because in July 2001 and January 2002, the Board approved approximately $3.7 million and $2.8 million, respectively, for two additional buyout programs.
The district did not adequately evaluate and/or monitor the cost of legal services, and the district did not prepare Request for Proposals (RFP) for its legal services.� Also, legal service arrangements were not approved by the Board of Trustees, nor were written agreements always prepared.�� In addition, the law firms did not always provide adequate supporting documentation, and the payments to these firms were not always in accordance with district guidelines. The district's legal expenses increased from $732,056 in fiscal year 1999 to $1,903,002 in fiscal year 2000.
The district needs to improve its process of procuring and monitoring most of its professional services (excluding engineering services).� In addition, the district could not always provide information to support the benefits it was receiving from each contract.� It appears the procurement and management of professional services is not consistent on a districtwide basis partially because the policies and procedures are general and allow various interpretations by each department.� The district uses professional services for areas such as real estate appraisal, public relations, training programs, general investment and advisory services, computer programming, financial audits, pension consulting, and rates consulting.
Some disbursements did not appear to be a prudent, reasonable, or a necessary use of district funds, including:
The district provided over $15,000 in fiscal year 2001 and over
$10,000 in fiscal year 2000 to organizations for which the supporting
documentation did not always indicate the business purpose and/or identify
those people attending.
In January 2002, the district spent over $12,000 for its Diverse
Universe Award Celebration luncheon and for promotional and informational
material.
The district needs to improve its construction reports to provide more accountability to the public.� The district does not compare and report cost estimates (budgeted amounts) to actual award (contract) cost of a project, nor does the district compare the award cost to the completed project cost.
The supporting documentation for the district's business expense reports (particularly for business meals and credit card charges) is not always adequate.� Airline tickets are not always attached to expense reports, and a business reason for flight upgrades is not documented.� In addition, some lodging appeared excessive.
The district has not established a limit on the amount of unused accrued sick leave paid employees.� One employee received over $119,000 for his unused sick leave.� A districtwide policy on record retention and document destruction has not been established.� Also, a current list of related employees and employees with secondary employment is not maintained and monitored by the Office of Human Resources.
The district compensated employees $76,250 for turning in district vehicles the employees were using primarily for personal commuting purposes which does not appear to be a necessary or appropriate use of district funds.� In addition, vehicle usage logs are not maintained for many vehicles.
Formal written minutes were not prepared for closed meetings.� The minutes, ordinances, and resolutions are not being signed on a timely basis.
The district is not conducting a physical inventory of its fixed assets on a timely basis.� In addition, the individual performing the physical inventory is also responsible for recording and accounting for the fixed assets.� The district's financial statements, as of June 30, 2001, show an investment in general plant and equipment of over $48 million.
Some employees are allowed to use district property for personal use.� The district's inventory records are not accurate, periodic physical inventories are not conducted on a regular basis, and the inventory control function is not adequately segregated.
Our previous audit, issued in August 1988, made 92 management recommendations to the Metropolitan St. Louis Sewer District.� Of those recommendations, 66% have been implemented, 19% have been partially implemented and 13% have not been implemented by the district.� The final 2% were informational recommendations and required no action by the district.
