Auditors detail problems with Cardwell finances, record keeping

Representatives of the Missouri state auditor's office were on hand Monday afternoon to deliver the report for 2002 as requested by residents of the city by petition.

The report found several problems with the city's finances.

The report stated $136 more was received than deposited into the city's accounts. The city could not show where the money went for lack of documentation from replenishing the petty cash funds and from offering cash refunds.

The city did not maintain the petty cash fund on an imprest basis, a petty cash ledger, or documentation to support the receipts and disbursements of petty cash.

There was no independent oversight or segregation of duties related to the utility system, or periodic reconciliations of total billings, payments received, credit adjustments, and delinquent amounts for the water, sewer, trash and mosquito spraying services.

The city budgets and published financial statements did not include all information required by state law.

The city had not established a formal policy for soliciting bids.

Several expenditures reviewed did not appear to be prudent use of public funds, like a $48 plant for an official's family, and $177 for a Christmas dinner party for city officials, employees and their spouses.

The city did not enter formal contracts for some services obtained, including more than $28,000 for trash hauling services.

The city did not have ordinances establishing employee salaries and paid bonuses to some employees in 2002.

The report also noted time sheets were not prepared by city employees and the board failed to appoint someone to fill a vacant alderman position on the board after Mayor David Bishop was impeached and removed from office.

Alderman Connie Risinger was elevated to mayor in May 2002 and her former alderman position remained vacant until Wanda Lee was elected in April 2003.

The impeachment came after the city donated property to an individual.

The city did not immediately obtain a deed to the property when the it was donated to the city in 1998. In fact, the Dunklin County recorder's office did not show the city owned the property until February 2002.

The city did not solicit bids or obtain an appraisal before later donating the same property to Debra Harper, under the stipulation that she would return a $3,500 donation to the city if she later sold the building.

The real estate transaction was one of the major reasons noted for Bishop's impeachment.

Litigation later ensued over the property, and the auditor's office noted that better documentation of the various transactions would have prevented it.

The report also noted documentation did not exist to support the allocation of payroll and fringe benefit expenditures to the city funds.

The city clerk's salary was split evenly from the general fund and water and sewer fund, and the water/street commissioner's salary was paid from the water and sewer fund plus $100 from the street fund.

No documentation existed showing how much of their time was spent in each portion of their duties to show which funds their salaries should be paid from.

The report noted fixed asset records need improvement.

The city had not prepared and maintained adequate detailed property records for general fixed assets, including the cost of assets owned by the city.

The auditor's office recommended using a tag number, description, cost, acquisition date, location and subsequent disposition of city assets, and that annual physical inventories should be performed.

The report noted the board had not adequately documented the specific reasons for holding closed meetings or approval of its bills as required by the Missouri Sunshine Law.

One closed meeting even included discussion on who would be authorized to sign checks for the city, a topic not allowed in closed meetings under the law.

The report also noted the city needed improvement in the organization of city ordinances.

The auditor's office recommended the city codify the ordinances and index all ordinances passed and rescinded.

Director of Audits Thomas Kremer, Audit Manager Debra Lewis, and In-Charge Auditor Carl Zilch, Jr., participated in the audit.

Lewis and Zilch were available at the meeting to give the results.

After Lewis made the report, Harper asked how this audit compared to audits from other small towns in the state.

"I've had better," she said. "I've had worse."

Lewis said she had noticed an improvement in the city since the dates reviewed in the audit, especially in record-keeping.

"I think the city had a good audit here," Bishop said.

He said the city had already implemented several recommendations made to correct the problems pointed out in the audit, and he hoped to use the recommendations listed to correct any remaining problems.

"I have a good board to work with," he said.

The complete report can be found at http://www.auditor.mo.gov.