Report No. 2009-64
June 2009
Complete Audit Report
The following findings were included in our audit report on the City of St. Louis, Office of the License Collector.
The License Collector's office could improve procedures to resolve non-compliance issues in the license application clearance process in a timely manner, including establishing guidelines for determining when it is appropriate to close non-compliant businesses and continuing to coordinate resolutions with other city departments. Our review found that, while license fees had been paid, numerous businesses have operated without a business license for several years due to other non-compliance issues.
Some follow-up procedures performed are not adequately documented and information is not maintained in a readily accessible, centralized location to allow for proper monitoring and supervision. The License Collector's office does not send out deficiency notices to businesses in a timely manner, if at all, when licenses cannot be issued as a result of pending applications that have deficiencies in the clearance process. The License Collector's office coded incorrect statuses for some businesses on the computerized license database, preventing the required follow-up work from being performed. The License Collector's office does not have adequate procedures in place to identify such errors on a timely basis.
The License Collector's office could improve procedures used to verify the accuracy of information reported on some types of business license applications where fees due are based solely on information provided by businesses. The License Collector's office has some categories of business license applications that require businesses to report and calculate license fees due based on information provided by the businesses. While the businesses sign a sworn statement on the applications certifying the accuracy of the information reported, no supporting information is provided and procedures to verify the reported information are limited.
Internal control procedures over receipts could be improved. During the fiscal year ended May 31, 2008, the License Collector's office processed approximately $57 million in receipts. The License Collector's office maintains a mail log to track all monies received by mail; however, entries on the mail log are not reconciled to deposits. The License Collector's office does not have procedures in place to ensure monies collected in the field are turned over to the Finance Division for processing and depositing. In addition, records retained of monies collected in the field are not reliable.
The License Collector's office does not have procedures in place to ensure monies collected for duplicate license fees or insufficient fund (NSF) check fees are deposited. Checks received in the License Collector's office that have been remote deposited are not maintained in a secure location. Independent or supervisory reviews and reconciliations of various records are not always performed or documented.
The License Collector's office does not have a formal written procurement policy. As a result, the decision to solicit competitive bids/proposals for purchases is made on an item-by-item basis and is generally obtained through informal inquiries or research. Supporting documentation of bids obtained or inquiries and research performed is generally not retained. The License Collector did not execute formal written contracts with several businesses for services provided. Services provided without current or formal written contracts included armored car services, general contract work for office renovations, and employee performance assessments.
Payroll procedures could be improved in the License Collector's office. A reconciliation is not performed between the payroll register and the adjusted payroll variance report to verify the accuracy of payroll distributions. Employees do not sign off on time records to verify accuracy and supervisors do not sign off on employee time records to indicate their review and approval. Payroll records in the License Collector's office contained a number of errors and inconsistencies. The personnel manual has not been updated to include all policies and procedures currently followed by the License Collector’s office.
The License Collector, the Chief Deputy License Collector, and a manager use their assigned, unmarked, city-owned vehicles for commuting and personal use. While these individuals reported a combined 9,435 miles as commuting and personal use to the Internal Revenue Service as compensation on their W-2 forms for 2007, the officials do not maintain vehicle usage logs to document miles driven for official, commuting, and personal use. Records of vehicle use and monitoring procedures for the License Collector's vehicle fleet are not sufficient. Vehicles may not be used efficiently and effectively. Our review of monthly mileage records noted that 3 of the 12 vehicles had 8 months of inactivity during the 15-month period reviewed.
The License Collector could improve procedures to monitor and ensure bank accounts are sufficiently collateralized. The License Collector's office operated without a current depository agreement for 9 months during the audit period and has not competitively procured banking services for several years.
The License Collector's office operated without a formal current budget during fiscal year 2008. Also, the beginning operating account balance plus commission and interest revenues collected during 2008 was significantly more than needed to cover the operating expenditures for fiscal year 2008, even after distribution of excess 2007 commissions. While the commissions retained were not in excess of the maximum allowed by state law, the budget did not clearly indicate why such a large reserve was needed.
Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov
