Auditor Gives Brentwood Lowest Possible Score: Poor

Missouri State Auditor Tom Schweich, following an audit process that lasted 16 months, has given the City of Brentwood a 'Poor' rating for its overall performance. It's the lowest of the four possible ratings.

The audit covers the year of 2011, so the city has already made improvements in some of the areas mentioned. The audit begins with a brief "citizens summary" of each area. The 'Poor' overall performance is described as:

The audit results indicate this entity needs to significantly improve operations. The report contains numerous findings that require management's immediate attention, and/or the entity has indicated most recommendations will not be implemented. In addition, if applicable, most prior recommendations have not been implemented.

A letter from Schweich to the mayor and aldermen explains the objectives of the audit.

1. Evaluate the city's internal controls over significant management and financial functions.
2. Evaluate the city's compliance with certain legal provisions.
3. Evaluate the economy and efficiency of certain management practices and operations, including certain financial transactions.

The audit report is 26 pages long including the cover page, and covers these 12 areas:

• Expendtitures

Under expenditures, the audit states the city's bid policy wasn't followed for several purchases and bid documentation was not kept for several others.

The city has not obtained proposals and written contracts for various professional services. One example was the hiring of a media consultant without soliciting proposals. The consultant is paid $200 per hour and was paid $11,800 during the year 2011.

Also under expenditures, the audit states fuel bills are not paid in time. The audit found the November 2011 fuel vendor bill showed late fees of $250 and finance charges of $320.

Regarding credit cards, the audit found the city does not maintain adequate documentation for some purchases, and as a result, cannot ensure all purchases on city credit cards are 'appropriate and reasonable.'

One example of this was items charged to the mayor's credit card with no supporting documentation for plane tickets, hotels, and conference fees in January 2011 totaling approximately $1,400.

The auditor made recommendations for each of the five sections under expenditures, and the city responded, generally in a way to say that it will comply. For instance, regarding credit card statements, the city's response was:

The Finance Director reviews all invoices including monthly credit card statements. All credit card statements now have supporting documentation for all charges. In addition, the City has received documentation to substantiate the majority of the charges in question during this audit.

• Fire department overtime and timesheets

The state audit says that despite a recent legal settlement with the firefighters union regarding excess overtime payments, the city only requires the fire department to submit summary overtime reports, not detailed timesheets, to the city finance department for payroll purposes.

The city paid firefighters approximately $100,000 in overtime for the year 2011.

Before July 2011 the fire department was not required to complete timesheets. It state that currently, firefighters do complete timesheets, but the timesheets are not submitted to the city finance department which processes payroll.

Brentwood's repsonse to this was the city is working to implement an electronic attendance system that will allow all timekeeping to be automated and submitted electronically to the payroll module.

• Payroll and leave records

The state audit found problems with payroll areas, which possibly resulted in some employees being overpaid.

For instance, in March 2009 the assistant fire chief was hired to also serve as the part-time building inspector.

He was paid a salary as assistant fire chief and on an hourly basis for building inspection tasks. The audit states that several city officials indicated they believed the assistant fire chief was working two jobs at the same time; but, no action was taken by the city until they began to receive citizen complaints.

Between the two positions this individual was often paid more than $13,000 per month.

Another example is a police department employee timesheet for the period ending September 20, 2011, indicated 10.5 hours of comp time and a summary section of the timesheet had this amount crossed out and replaced with 15.75 with no explanation.

The audit also stated the city is not always in compliance with its overtime policy, timesheets are prepared by employees, but not signed by the employee and some do not indicate approval by the supervisor.

The city's response was that it is implementing an electronic timekeeping system maintained by supervisors.

• Additional compsensation

In a written agreement with the Hanley Road Corridor Transportation Development District (TDD), the city is paid $24,000 a year to provide monitoring and administrative duties for the TDD.

The former City Administrator was allowed to allocate these fees to select employee salaries.

For 2011, the former finance officer received $13,500, an accounting clerk received $6,000, and the former city administrator received $1,250.

The audit was also critical of the city's policy of paying employees for perfect attendance.

The city's response was that the payments from the TDD ended in January 2012, and the practice of paying for perfect attendance is in the employee handbook, and changes will be supported with an ordinance.

• Litigation

Retailers in a development miscoded sales tax returns, which left bond accounts underfunded by approximately $460,000, leading to the bank not being able to collect their fees.

City officials indicated they had worked with the retailers to correct prior miscoding errors, but for a period of time was unaware that retailers had once again begun miscoding their sales tax returns. The city obtained a loan of $460,000 in November 2009 to satisfy the underfunding of bond accounts.

Lawsuits resulted, and the city hired legal counsel to handle the litigation and spent approximately $260,000 on legal expenses. A resulting loan taken out by the city was repaid in October 2010 with interest costs of approximately $13,500.

The audit's recommendation is that the Board of Aldermen should sufficient procedures are in place to monitor sales tax revenues of businesses collecting sales taxes on behalf of the city. The city agreed with the recommendation.

• Meeting minutes

The state audit found instances where the board of aldermen went into closed session with no reason given.

Also, the audit found that the city administrator keeps notes, but they are not well organized and are hard to understand.

The recommendation is that the board of aldermen ensure minutes are prepared for all closed meetings.

Brentwood's response is that the reason for a closed session is posted on the agenda and announced at open session, also in the future, the reason for the closed session will be reflected in the notes.

The city had no response to the criticism of minutes in closed meetings.

• Accounting controls

The state audit found problems with payroll areas, which possibly resulted in some employees being overpaid.

For instance, in March 2009 the assistant fire chief was hired to also serve as the part-time building inspector.

He was paid a salary as assistant fire chief and on an hourly basis for building inspection tasks. The audit states that several city officials indicated they believed the assistant fire chief was working two jobs at the same time; but, no action was taken by the city until they began to receive citizen complaints.

Between the two positions this individual was often paid more than $13,000 per month.

Another example is a police department employee timesheet for the period ending September 20, 2011, indicated 10.5 hours of comp time and a summary section of the timesheet had this amount crossed out and replaced with 15.75 with no explanation.

The audit also stated the city is not always in compliance with its overtime policy, timesheets are prepared by employees, but not signed by the employee and some do not indicate approval by the supervisor.

The city's response was that it is implementing an electronic timekeeping system maintained by supervisors.

• Vehicles

The city has not documented the basis of how monthly vehicle allowance amounts paid to various employees were determined. Vehicle allowances are intended to compensate employees for driving personal cars within the city and surrounding area to conduct city business. The city pays monthly vehicle allowances of $450 to the City Administrator and $350 to the Assistant City Administrator.

The city has not established effective monitoring procedures regarding fuel and vehicle use. Without effective procedures, fuel could be purchased by employees for non-city use and the city's vehicle fleet may not be used in an efficient and appropriate manner. The city maintains 55 vehicles for various city services including police, fire, and public works. During the year ended December 31, 2011, the city incurred fuel costs of approximately $188,000.

The city maintains two bulk diesel fuel tanks at the public works department, but does not maintain logs of fuel pumped from the tanks or usage logs for vehicles that use these pumps.

Of the city's 55 vehicles, 36 are non-specialized vehicles. An evaluation of usage to determine if the number of vehicles is necessary and justified has not been performed. Annual mileage for 8 of the city's 36 non-specialized vehicles was less than 2,000 miles.

The audit recommends that the city review vehicle allowances and set the allowances to reasonably reflect the actual expenses incurred by the applicable employees. Also to establish adequate records and procedures to effectively monitor vehicle and fuel use.

The city responded that the allowances were set when the employment agreements were negotiated and are set by resolution adopted by the Board of Aldermen. The city said the recommendation will be taken into consideration for future employment agreements.

Beginning in 2012, the city implemented a driver fuel card policy. Also that detailed usage reports from the fuel vendor are reviewed on a monthly basis to ensure that fuel purchases are reasonable.

• Budgets

The audit states that for the year 2011, city budget documents do not include the actual beginning and estimated ending available resources for any funds. As a result, the Board is not using all available information to assist in effectively managing the city and the public is not provided a complete overview of city finances.

The audit states that Missouri law requires the budget present a complete financial plan for the ensuing budget year and outlines the various information to be included in the budget.

The city responded that the 2013 annual budget is in compliance with state law. Beginning and ending fund balance information is provided for all funds.

• Bank reconciliations

The state audit stated that bank reconciliations are not prepared in a timely manner.

For instance, the December 2011 bank reconciliation was the most recently completed reconciliation as of April 2012. Also, the December 2011 payroll account bank reconciliation contained several reconciling items that were carried forward from month-to-month instead of adjusting entries being made in the city's accounting system.

The city does not routinely and timely follow up on outstanding checks. At December 31, 2011, the city's general account had 22 outstanding checks totaling $4,681, and the payroll account had 12 outstanding checks totaling $1,465.

The city's response is that it continues to improve the timeliness of monthly bank reconciliations, and is working to develop procedures for following up on outstanding checks and developing a process for properly reporting related unclaimed property. Also, discrepancies are now investigated and resolved when they are identified.

• Property records

An inventory of city property is to be performed annually, and has not been performed in at least five years. Also, city property is not tagged and properly identified.

In addition, property records maintained do not include all necessary information such as date and method of disposal. The book value of city assets exceeded $13 million at December 31, 2010, according to the city's most recent inventory record.

Adequate city property records and procedures are necessary to secure better internal control over city property, and provide a basis for determining proper insurance coverage.

Property control tags should be affixed to all property items to help improve accountability and ensure assets are properly identified as belonging to the city. Property records should also include information such as acquisition/disposition dates. A physical inventory should be performed on an annual basis.

The city's response was that the board of aldermen will ensure that an inventory is completed annually, and that records are kept that will include all imformation for each asset.

• Library

The most recent written agreement between the city and the library provided by the city is from 1947.

The audit states that an analysis is needed of the monthly rental and utility fee of $500 for use of the lower level of city hall and a fee of $50 for accounting services provided for the library by the city finance department.

This rate has been the same for at least 20 years.

The audit states that a written contract is needed.

The city responded that it is in both parties’ best interests to continue to provide space and services that would be very expensive for the library to obtain by other means and that benefit Brentwood residents. Also, that the city will consider updating the written agreement with the library defining services provided and benefits received.