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Auditor Gives Brentwood Lowest Possible Score: Poor

Following a process that dates back to 2011, the audit covered 12 different areas of the city's operations. Many details about the audit are included in this article.

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.

Keith Slusser May 08, 2013 at 12:41 AM
These findings are disgraceful. Elected officials are supposed to be stewards of our money, and based on this audit they are not doing what we elected them to do. Next election we need to make sure we put people in office who won't burying their heads in the sand and actually do their job (which they are paid quite well for only being a part time job).
Kay Scott-Boyd May 08, 2013 at 01:09 AM
I think that the contracts made to the city employees who are getting the car allowances should be re-evaluated. With what shows in this audit at least half of the year it does not seem to me that those people implemented changes in accounting practices which I would think should have been done as soon as the previous City Administrtator stole our money! So how long do we have to pay for them to work here when it seems they have not been good guardians or challenged previous accounting practices. So are we going to start bidding on all contracts immediately? Since the CPAs that recommended things were blown off by the Mayor and others should we also get another CPA firm and that legal firm we paid over $260,000 to for a year of EASY work? Seems we should start new so the "good 'ol boys" don't continue to waste our money.
Alex May 08, 2013 at 01:26 AM
It sounds like Mayberry to me!
Just A Thoughtq May 08, 2013 at 02:12 AM
While some of the issues pointed out are valid, many of the things, such as "An evaluation of usage to determine if the number of vehicles is necessary and justified has not been performed", "An inventory of city property is to be performed annually" are simply opinions of the current State Auditor with no state law being violated. The State Auditor provides no guidance for cities to follow… there is no “Audit Manual” for a City to review. For example... what property should be inventoried? Can you imagine the public outcry if a city employed a person making $35k a year to inventory every paper punch, hammer and widget they own? The Auditor would then question why this individual was being paid $35k.
Fighting for Ethics May 08, 2013 at 02:41 AM
Brentwood's City Code requires an annual inventory. It is in section 2. The same section that list the Mayor and Board of Aldermen's responsibility. Interesting, at the April BOA meeting the city tried to increase the disposal of inventory from $1,000 to $10,0000. Hmmm I wonder why? Perhaps purchases between $1,000 and $10,000 can't be accounted for by the city. That makes sense because they don't like to keep timesheets or receipts. Just A Thought:: the desire to protect the residents tax dollars because it's the right thing to do!!!' No laws needed
Jim Pozzo May 08, 2013 at 02:54 AM
Yeah, I guess no big deal. City code requires the annual inventory of equipment valued at $5,000 or greater, but who is going to enforce the code, the same people that are supposed to do the inventory! Elected officials take an oath to enforce city laws, state laws and federal laws, but I guess they forgot about it.
Citi for Honest Governance May 08, 2013 at 03:21 AM
Hello "Just A ThoughtQ", you are correct, the State Auditor provides no guidance for cities to follow...But there IS an "Audit manual" to review. Our City Administrator(s) pay dues to be members of the National League of Cities(NLC), and are trained and educated to follow the Government Finance Officers Association (GFOA) Best Practices and Advisories. However, much like how our elected leaders chose to ignore the warnings of our Cities CPA for multiple years, and even more recently chose to ignore the GFOA's minimum Budget Reserve recco of 17% to 100%, for a 10% minimum, they simply disposed of the GFAO's Accounting, Auditing and Financial Reporting section that the rest of the US & Canada follows. Instead they took the position that they know better...If your still buying their BS, what's the line: "If you believe that, I've got a bridge to sell you"
Matt Saunders May 08, 2013 at 03:29 AM
I will admit I was expecting a report that was not the best. These finding however were shocking when you consider all the years our CPA's were telling our city officials of the negligence in oversight that was taking place. Where do we go from here? Do the long term members of the board deserve a free pass for violating numerous state laws, ignoring our own Brentwood City code and spending our money with not control or what seems to be no care at all? We as citizens must follow up and let the Board and Mayor know we are watching everything you do. The next Aldermanic meeting which is on Monday, May 20th at City Hall. The Board meets every first and third Monday for most months so mark your calendars. Go to the Brentwood website for more information about the meetings. It is now up to us "we the people" to see this through. Please attend the meetings and make sure your voice is heard. Also, let your neighbors know all this information is on-line and to check it out. To everyone who was there tonight - thank you for being there. Matt
Bob Earthal May 08, 2013 at 03:52 AM
Municipal governments are often little more than jobs programs for marginally employable friends and family. To an extent, I'm OK with that. Government assistance can be better controlled at the local level. However, Brentwood seems to be different. For years, I've heard the mayor prattle-on about the special nature of city employees, even though they seem remarkably average to me. I assumed I was missing something; after all, they command extraordinary salaries - some of the highest in the area - so they must be special! Tonight we received news of what makes them so special: they can't count, can't fill-out a document, can't handle money or pay the bills on time, but get paid extra if they actually show-up at work. Isn't that special!
Fighting for Ethics May 08, 2013 at 04:16 AM
Auditor Schweich gave the city of Brentwood the lowest rating, hundreds of thousands of resident's tax dollars have been squanders and yet he still says everything is great because he didn't uncover amy fraud. The city already got busted for the fraud in 2011 and they knew the state was going to be reviewing 2011 and yet they still got the lowest rating. Auditor Scheeich's office will bill the city $70,000 and allowed 6 residents to ask questions while telling them all is fine in Brentwood and will be even better in 90 days. Did he begin his political career in Brentwood?
Mel May 08, 2013 at 02:27 PM
Matt, please tell your wife and anyone else that worked hard to get this information out how much we appreciate their work because I know this hasn't been easy.
CHERYL EMERY May 08, 2013 at 04:23 PM
I agree with you completely Matt. The results of this audit should give the residents of Brentwood the "go ahead" with staying on top of what our City Officials are doing. It worked to keep pushing for answers but, there is STILL work to do. The results of the audit proved that our instincts were correct. Remember, Mayor Kelly did not support this audit and look at the findings. He should have "welcomed" the idea of a state audit in order to assure the citizens that he wanted what was best for our City! I really think a Forensic Audit is needed.
Brentwood Escapee May 08, 2013 at 04:59 PM
It is a little disturbing that the Mayor of Brentwood is also a VP at Eagle Bank & Trust. I wonder if the bank needs an audit as well.
Laurent Jean Torno, III May 08, 2013 at 06:13 PM
Thankful for this revealing audit for the tax paying citizens and homeowners in Brentwood, MO. Add The Torno's to the list of local citizens recommending a follow up forensic audit.
eay6277 May 08, 2013 at 06:58 PM
What was being said about there needing to be a learning curve or time to adjust to being an elected official bothered me a bit. At my new job I was expected to learn new things and then implement them in a timely manner. Many of those on the board have been there for years and have plenty of time to learn their duties. Look at Maureen Saunders; she is new to the board and seems more able and committed to doing what's best for the residents than any of the other board members. Most of these officials should have been up to speed years ago.
Barry Williams May 09, 2013 at 10:50 PM
Brentwood residents owe a lot to a civic-minded housewife in our midst who, alarmed by revelations of fiscal misconduct by city officials, took the initiative to seek a state audit of our city. The audit has been performed, the results are in, and it turns out Mrs. Saunders had good reason to seek an investigation. City officials were found to be lax, unprofessional, and inept, and to have misspent a lot of our tax dollars. No wonder the mayor opposed Mrs. Saunder's audit request and wouldn't sign her petition. In light of (a) the many fiscal problems documented by the auditor in just a single year, (b) the known criminal activity in City Hall that ended the 20-year reign of city manager Chris Seemayor, and (c) the 24 years of improper overtime payments to firefighters, it's clear that a forensic audit is needed to expand this probe to cover additional years. If additional criminal activity took place during these years, we need to know about it. The state auditor gave Brentwood the lowest rating possible: "Poor." To put this into perspective, since the beginning of 2012, the auditor has issued 112 reports with a rating, and only 16 were "Poor."

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