Report No. 2008-72
October 2008
Complete Audit Report
The following findings were included in our audit report on the City of Union Star, Missouri.
The Board of Aldermen provided little oversight or supervision of the work performed by the City Clerk, who performs the duties of both Collector and Treasurer for the city and is responsible for all city accounting functions. While a former City Clerk maintained ledgers of receipts and disbursements and available cash balances for each fund during the first half of 2007, this fund accounting system was apparently not utilized after June 2007 when a new City Clerk was hired. While there is evidence that monthly financial reports were prepared during the first half of 2007, it does not appear these financial reports were ever formally presented to and approved by the board. In January 2008, the city's computer system crashed and a significant amount of the accounting data was lost. Since back ups of this data were not performed, city staff could not compile any monthly financial reports for the last half of 2007 and no records of receipts, disbursements, accounts receivable, or accounts payable were available. In addition, many other financial documents, such as bank statements, cancelled checks, and deposits slips, were not readily available for our review and had to be requested from the bank in some instances.
It is unclear whether street related revenues, including a property tax for street lights as well as motor vehicle fees received from the state, are being used as required by state law. In addition, bank reconciliations have not been performed for any city bank accounts for some time and those that were performed can not be located. Budgets were not prepared the last two years and some semi-annual financial reports were not published as required by state law.
Receipt slips are not issued for some monies received and an independent review of the composition of receipts to deposits is not performed. Checks and money orders received are not restrictively endorsed and receipts are not posted to the city's accounting system until a deposit is prepared. The City Clerk is not bonded and controls over subsidiary accounts receivable records for water and sewer accounts and property taxes need to be improved.
Formal reviews of water and sewer rates have not been performed for several years although there have been several rate increases, and the water and sewer ordinance has not been updated since 2000. Controls over water deposits need to be improved. There is a $3,388 difference between the meter deposit list and the bank balance in the water deposit account. The city does not formally document a reconciliation of the total gallons of water billed to customers to the gallons of water purchased by the city. In addition, the city was unable to produce a copy of the bond agreement and was not aware of the bond covenants. Bond covenants requiring the city to obtain an audit of the accounts, books, and records of the sewer system, and to maintain adequate records of the operation have not been met.
There was no evidence that the board provided adequate controls over disbursements. The city does not have formal bidding or purchasing policies and the board does not properly monitor city disbursements. Documentation was not retained to support some disbursements and controls over the use of numerous city credit cards have not been established. Some invoices were not paid timely and payroll taxes have not been remitted to the Internal Revenue Service (IRS) on a timely basis. In addition, records of time worked are not maintained for some city employees and some disbursements do not appear to be necessary or prudent uses of city funds.
City procedures for conducting and documenting closed meetings are not in compliance with state law, and improvement is needed in the organization of the city's ordinances. Additionally, improvement is needed in the policies and procedures related to information requested by the public.
Although the authorized bonds have never been issued, the city has accumulated approximately $19,200 in the General Obligation Street Bond Fund, and another $4,280 is due this fund from the General Fund. Voters authorized $47,000 in bonds to be issued for street related projects in 2005 and the city assessed a debt retirement levy in both 2005 and 2006. While this tax was not levied in 2007, the board has had no significant discussions regarding this issue and has not formally documented its plans for the accumulated funds. In addition, a formal plan for maintenance of city streets has not been prepared. Further, a significant cash balance, approximately $22,600 at June 30, 2007, has accumulated in the Street Lighting Fund and the city should consider this information when setting the street light levy in the future.
Also included in the audit were recommendations related to the property tax system and capital assets.
Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov
