Report No. 2011-29
June 2011
Complete Report
Findings in the audit of the City of Pine Lawn

Background
The Missouri State Auditor's Office has been petitioned by the citizens of Pine Lawn to audit the city four times in the last 17 years. Of the 29 recommendations reported in 2006 (Report no. 2006-082) for the city, only 13 were fully implemented. Multiple recommendations in this report are repeated from previous audit reports issued by our office.

Financial Condition
The General Fund and Trash Fund are in poor financial condition, and citizens could suffer the loss or reduction of some services. The city regularly transfers money from the General Fund to cover Trash Fund shortages, and the General Fund is still repaying a loan from the Capital Improvement Fund. The city is often late paying its trash vendor and paid $6,700 in late fees from January 1, 2009, to March 1, 2011. In February 2011, the city had a past due balance with its trash vendor of $87,225. A similar condition was noted in the 2006 audit.

Trash Services
The city does not charge enough for trash services to cover operating costs and is not adequately pursuing delinquent customer accounts. At the current user rate, the city pays $181,200 a year more for trash service than it would receive if all citizens paid their bills on time. Adding to the problem, as of January 4, 2011, the city is owed $1.4 million by 799 delinquent trash customers (63% of all trash accounts). The city's failure to adequately pursue delinquent trash accounts has been noted in audit reports at least as far back as 1994. The city must increase trash rates and/or decrease the cost of providing trash service and diligently pursue delinquent customer accounts or this situation will continue to worsen.

Budget Procedures
The city needs to improve its budgeting procedures. For fiscal year 2010, the city overspent its General Fund budget by $309,768, the majority of which was due to the police department overspending its budget by $255,855. If the Board of Aldermen regularly reviewed budget to actual statements, it could better control such overspending.

Instead of preparing a new budget for fiscal year 2010, the Board just used the fiscal year 2009 budget, which was not approved until 5 months after the fiscal year began. Moreover, no budget was prepared for any city funds other than the General Fund. The budget did not include many of the elements required by state law, such as beginning and ending cash balances and actual receipts and disbursements for the 2 preceding years. The 2000 and 2006 audits noted similar deficiencies.

Closed Meetings
The city often fails to document compliance with the Sunshine Law. Open meeting minutes do not always reflect a roll call vote to go into closed session and/or the specific reasons for closing the meeting. Similar concerns were noted in the 2000 and 2006 audits.

City Procedures
The city needs to improve it procedures and records for city property. Some departments do not maintain a list of assets, while others have incomplete or outdated lists, many assets are not tagged, and documented annual physical inventories are not performed, leaving city assets susceptible to theft or misuse. Although state law requires city contracts to be in writing, the city does not have written contracts with some of its service providers, such as attorneys, payroll services, and collectors of electronic fines and court costs. The city also did not maintain adequate documentation to show that bids were obtained for over $160,000 in purchases.

The city should consider obtaining regular audits to help with monitoring the city's financial condition and ensuring the propriety and accuracy of financial transactions. The city should adopt a written travel policy which explains acceptable travel expenses and the documentation required for reimbursement. The city should also maintain fuel and usage logs for equipment and vehicles. For fiscal year 2010, the city purchased $71,000 of fuel, but there is insufficient documentation to determine whether the miles driven were reasonable, all the fuel was used for city purposes, or the city received all the fuel for which it was charged.

Payroll and Fringe Benefits
The city paid salary advances to employees and aldermen in violation of the Missouri Constitution. The city should ensure ordinances exist setting the compensation of city officials and employees. The city also needs to improve its procedures related to the Mayor's use of a city vehicle. The city should require the Mayor to maintain a detailed mileage log indicating business and personal use of the vehicle, and the city should report the amount of personal mileage, including commuting, on the Mayor's W-2 form. If no mileage log is maintained, the IRS requires the full value of the vehicle be reported on the W-2 form. If neither of these approaches is followed, the IRS could impose penalties and/or fines on the city for failing to report all taxable benefits.

In the areas audited, the overall performance of this entity was Poor.*

American Recovery and Reinvestment Act 2009 (Federal Stimulus)
The City of Pine Lawn did not receive any federal stimulus monies during the year ended June 30, 2010.

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