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Auditor Logo Susan Montee

Report No. 2008-60
September 2008

Complete Audit Report

The following findings were included in our audit report on the City of St. Louis Supply Division.

It appears that some city departments may be using emergency purchases to circumvent normal city purchasing procedures. Auditors reviewed 28 emergency purchases, totaling $371,845, made by various city departments that were processed through the Supply Division and approved by both the Supply Division and the Comptroller's Office. Of the 28 items reviewed, 22 did not appear to meet the city's definition of an emergency. Some of these purchases included the following:

  • The Street Department purchased a traffic signal detection system for $234,215.  It appears this purchase was delayed to the point where an emergency purchase was required to complete the project on a timely basis, and there was no documentation to indicate why the purchase had been delayed.
  • The Supply Commissioner purchased a new car for $25,567 for the newly-elected President of the Board of Aldermen.
  • The Health Department purchased satellite telephones for $9,390, a digital camera for $4,034, and other photo equipment for $1,131.
  • The Information Technology Services Agency purchased W-2 forms for $626.  This purchase included all W-2 forms needed for city employee tax records for the 2007 tax year.  A similar purchase was made for the 2006 tax year.

Other items that did not appear to meet the definition of an emergency purchase included a sno-cone machine, magnetic baseball schedules, fleece blankets, polo shirts, and couches.

For 13 of the 22 items purchased that did not appear to meet the definition of an emergency purchase, justification of the emergency nature of the purchase was not adequately documented, and no justification was documented for two of the 22 purchases. Nineteen items purchased included invoices with dates prior to the creation and approval of the emergency requisition form. Further, 26 of the applicable 27 emergency purchases were not bid as required. In addition, two of six applicable purchases did not have a letter requesting waiver of advertising for bids, including one purchase exceeding $200,000. Invoice prices for some purchases did not agree to the applicable contracted bid prices. In addition, some invoices did not provide specific pricing information to allow invoices to be verified for accuracy.

The city may be limiting available bidders due to the city's performance bonding requirements. The Supply Division requires all contractors maintain a performance bond equal to 50 percent of the value of the contract. The Supply Commissioner indicated some companies are choosing not to do business with the city because the performance bonding requirement can be a financial hardship. In addition, the city requires performance bonds for routine supply contracts where products would appear to be readily available from other vendors if the contractor defaults.

The Supply Division received approximately $431,000 in checks and money orders during the year ended June 30, 2007. Checks and money orders may be handled by as many as three individuals prior to being recorded for transmittal to the City Treasurer, which could cause delays in transmitting receipts on a timely basis. In addition, there is no process to allow for the reconciliation of amounts received to amounts transmitted to the City Treasurer.

Complete Audit Report
Missouri State Auditor's Office