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YELLOW SHEET Office of the State Auditor of Missouri |
Report No.
2000-113
October 26, 2000
Some problems were discovered as a result of an audit conducted by our office in response to the request of petitioners from the City of Bell City, Missouri.
Inadequate oversight and
monitoring by the Board of Alderman and inadequate records and procedures have
contributed to a serious financial situation for the city.� The city operated with very low cash
balances in many funds.� Due to the
inadequate cash balances in some funds, the city has at times paid bills from
whichever funds had money available.�
Also, the low cash balances have necessitated the city purchasing used
equipment which later required significant repairs.�
Inadequate
records and procedures have inhibited the board�s ability to effectively
monitor and manage the city and have resulted in or contributed to the city�s
problems.� These weaknesses include
inadequate detail in the budgets and other financial reports, lacking of
bidding for various purchases, inadequate segregation of accounting duties or
review of work performed, inadequate collection procedures on delinquent
utility accounts and a lack of reconciliations over utility billings, payments,
and accounts receivable.�
In
July 1998, the city purchased land and a new metal building to house city hall
for $26,500.� The city spent
approximately $4,700 more to renovate the building for offices.� The city did not maintain documentation of
the estimates for the various options it had considered prior to the purchase
of the building.� In addition, the
minutes of the board meetings contain no discussion of these various options or
cost estimates.� Also, the city did not
obtain a professional appraisal to value the land and building to purchase.� The bank, which wrote the loan, informally
appraised the property and building at $40,000 to $45,000 whereas the Stoddard
County Assessor, after the improvements were made by the city, appraised the
land and building at $27,300.
The
city has not taken adequate steps to ensure the timely collection of delinquent
accounts.� According to the Mayor, the
board was unaware the problem was significant until the new City Clerk prepared
a delinquent list in April 2000, which showed the delinquent accounts for
water, sewer, and trash services totaled approximately $16,000.� Several customers on the list had been
delinquent for three to four years with some account balances over $1,000.� The city also has not adequately accounted
for water meter deposits, has not created and funded reserve accounts required
by its sewer bond, and has not obtained annual audits.
The
city�s purchasing ordinance requires advertising for sealed competitive bids
for all purchases
of goods or services exceeding $100.�
However, we noted bids or proposals were not solicited, or bid
documentation was not retained, for several purchases, such as asphalting
($9,654) and insurance ($9,044).�
The
city entered into several installment loans with a local bank.� A 10-year loan was obtained in July 1998,
for the purchase of the city hall totaling $30,371.� Another loan was for 30 months obtained in March 1999, for the
purchase of a 1987 pickup truck totaling $3,863.� The contracts obligate the city to payments up to 10 years without
any option to renew the contracts on a yearly basis.� Extending the contracts over multi-year periods without the right
of withdrawal obligates the city for future periods which appears to violate
the intent of the Missouri Constitution on legal indebtedness absent a vote of
city taxpayers.
The
city financed its premiums for various insurance policies with one company at a
16.25 percent and 17 percent interest rate through an insurance premium
financing company.� This method of
paying insurance premiums is very costly.
The
city maintains two non-interest bearing bank accounts.� The average month-end bank balance in the
general account for the year ended June 30, 2000, was $25,068.� To maximize revenues, city monies should be
deposited into interest-bearing accounts.�
The
city paid the maintenance employee an additional $200 on July 16, 1999.� Also, while the former police resigned
effective July 2, 1999, the city paid him $200 on July 16, 1999 and on July 30,
1999.� There is no documentation of additional
hours worked by these employees to support the payments and they were
apparently additional payments for services previously rendered.� These payments appear to be bonuses.� In addition, all city employees received a
$50 and $25 Christmas bonus in December 1999 and 1998, respectively.�� These bonuses violate the Missouri
Constitution.�
Additionally,
in December 1998, a city employee received his payroll check one week in
advance of the date earned.� In June
1998, the city loaned the former police officer $500 to be repaid weekly in $25
installment payments.� Such payments
violate the Missouri Constitution, which prohibits any political subdivision of
the state from granting or lending money to an individual.� In addition, it is not prudent for a city to
compensate employees in advance.���
The
maintenance employee was the sole bidder for the city�s 1975 pickup truck.� The minutes documented the approval of the
sale of the truck to the employee for $500.�
While the title was transferred to the employee, the city was never paid
for the truck.� According to the Mayor,
the truck was instead given to the employee in lieu of the rest of a
retroactive raise.� Such a gift or bonus
is prohibited by the Missouri Constitution.�
Furthermore, in January 2000, the city sold its 1987 truck to the
Mayor�s father-in-law without publicizing or soliciting bids.�
The
city does not have a formal policy regarding public access to city
records.� A formal policy regarding
access to and copies of city records would establish reasonable guidelines for
the city to make the records available to the public.� The board meeting minutes do not always include sufficient detail
of matters discussed or action and votes taken.� For example, the minutes did not document the various options
discussed prior to the purchase of the new city hall land and building.�
