Report No. 2010-40
April 2010
Complete Audit Report

Findings in the audit of the City of Marceline

Electric Fund
The city has established electric rates that provide more revenue than is necessary to cover the costs of providing electricity services. Transfers totaling approximately $1.3 million for the two years ended October 31, 2009, have been made from the Electric Fund to the General Revenue Fund. These transfers are significantly more than needed to cover administrative costs and are primarily utilized to fund city operations. As a result, the electric rates paid by city residents were up to 158 percent greater than the average of 12 other cities surveyed. By continuing to fund city operations with electric revenues, the city is, in effect, taxing its citizens without voter approval.

The city entered into a unit power purchasing agreement for a portion of the city's electricity needs with the Missouri Joint Municipal Electric Utilities Commission (MJMEUC), which is projected to cost the city $440,000 per year for 30 years, without documenting its analysis of cost estimates of other alternative electricity sources. The city also entered into a 15-year lease purchase agreement in excess of $1 million to purchase two diesel powered generators to expand the capacity of the city's electrical plant. No cost study was documented to determine if upgrading the generators was cost-beneficial to the city. In addition, the city's relationship and agreement with the MJMEUC is not disclosed in the city's financial statements.

Accounting Controls
Cash receipting and disbursing duties are not adequately segregated and there is no documented oversight of the duties of the administrative secretary or City Clerk. The City Clerk also holds the position of City Treasurer, although there is no statutory authority for one person to hold both positions. Also, the city maintains an excessive number of bank accounts (18 checking accounts), several with significant balances, which results in additional record keeping and makes it more difficult to ensure all monies are accounted for properly.

Business Complex
The receipts generated from the Marceline Business Complex rents are not sufficient to cover the city's costs associated with the complex. As a result, the city's General Revenue Fund is significantly subsidizing business complex operations. Also, the city significantly overspent the amount budgeted for the business complex and miscalculated the level of the city's subsidy for the business complex in fiscal years 2008 and 2009.

Disbursements
The city does not always follow the city bidding ordinance or enter into written contracts as required by state law. Also, the city does not adequately track and reconcile fuel purchases to fuel usage.

Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov