Report No. 2009-111
Complete Audit Report
The following findings were included in our audit report on the City of Crystal City.
The city does not solicit or retain bid documentation for the purchase of some goods and services. The city utilized an outside law firm, not the City Attorney, for legal matters surrounding several lawsuits brought against the city pertaining to real estate transactions and Sunshine Law violations without approval of the Council or soliciting proposals. The city paid approximately $139,000 and $94,000 to this law firm for the years ended March 31, 2009 and 2008, respectively. Payments totaling $470 on credit cards and $33,795 for asphalt material were paid from summary statements and individual charge tickets or receipts were not retained. Also, several invoices for legal services from January through June 2008, did not contain sufficient detail indicating the number of hours worked and amount charged per hour. Some disbursements do not appear to be prudent and necessary uses of city funds, such as: gift cards ($9,300), Christmas party ($1,950), and retirement parties ($6,900), as well as various food, drinks and other supplies. The city hired a full-time mechanic in June 2008, to maintain and service all city vehicles and equipment without conducting a formal cost study. The City Council does not approve transfers between funds, such as the General Fund to the Road Tax Fund.
Written contracts were not obtained or retained for some services received. The city did not obtain a written agreement to document the payment plan for the demolition of a building and did not update the written agreement with the tenant of city property regarding providing grass and weed cutting services.
Improvements are needed to City Council meeting minutes and agendas to ensure compliance with state law. Meeting minutes are not signed to attest to their completeness and accuracy. Minutes are not prepared for most work sessions of City Council, committee meetings, and some closed meetings. In addition, Council meeting minutes do not adequately document all matters discussed or actions taken, and contained some errors. The city has not adopted ordinances to establish the compensation of its elected officials, including the Mayor, City Council members, and City Treasurer, as outlined by state statute. Several ordinances have not been updated or contain errors in wording.
The city has not established written policies for travel reimbursements, cellular telephones, uniforms, investments, Internet, email, or investments. The city appears to be in violation of its mandatory retirement age policy. The City Clerk utilized the city's phone system to accept personal collect calls from 2006 through 2008; however, there was no documentation of Council approval or pay back terms. The city has not established a policy documenting procedures for the purchase or sale of real estate and does not maintain a list detailing property owned. In addition, the City Council purchased an industrial site for $260,000 above the appraised value.
The city's water and sewer rates do not appear to provide sufficient monies to fund daily operations. The city's water/sewer operating account has a negative cash balance and incurred an operating loss for the year ended March 31, 2008. The city has not prepared final bills and issued refunds or applied deposits totaling approximately $9,278 for 66 inactive customer accounts. The city has not developed procedures to ensure all water meters are read, which can result in large amounts due from customers and possible loss of revenue. One customer's meter had not been read and a bill generated for approximately 2 years, resulting in an amount due of approximately $1,500. The city does not reconcile the total gallons of water billed to customers to the gallons of water pumped. The city does not collect some past due amounts from landlords when renters leave without paying the final water and sewer bill.
Salaried employees are not required to prepare timesheets, and timesheets prepared by street employees are not approved and signed by the street superintendent.. In addition, the city does not have a formal policy for compensatory time. The city pays approximately 22 street and water and sewer employees a yearly boot allowance of $135 per the labor contract; however, these payments are not properly reported as compensation for tax purposes.
Better controls are needed over bulk fuel purchases made by the city. Mileage/usage logs are not maintained for city-owned vehicles and equipment, and the city does not report taxable benefits associated with city vehicles used for commuting purposes that do not meet requirements to qualify as exempt vehicles per IRS guidelines.
Some business transactions within the city may give the appearance of a conflict of interest. The city paid the Park Board President $5,182 for swimming pool maintenance work during the year ended March 31, 2009. In addition, the city did not report the payments as employee compensation or withhold payroll taxes on the amounts paid to the Park Board President. The Park Board did not bid out or enter into a contract for the maintenance work to be performed.
Also included in the report were recommendations related to purchases, budgets and financial reports, and capital assets.