Nevada City Council reviews annual audit report
By Ralph Pokorny
Nevada Daily Mail
A lot of people do not understand what we do when we conduct an audit, B.G. Wolfe told the Nevada City Council during Tuesday night's meeting.
"An audit does not look at every transaction," Wolfe, a CPA with Daniel, Schell, Wolfe & Associates, P.C., said.
"We look at certain things and use statistical methods to evaluate the city's budget as a whole," he said.
Using this methodology, Wolfe told the council, the city had a clean audit overall.
"Your books are materially correct," he said.
"We do not talk about specifics," he added.
Wolfe said that they also look at the system the city uses to accumulate information and the city's compliance with certain city, state and federal rules.
Although Wolfe told the council that the city had a clean audit, he also noted that when auditors looked at these compliance issues that they found two instances where the city was in noncompliance and according to "Government Auditing Standards" must be reported.
In the first case the city was out of compliance with the Revised Missouri Statute Chapter 67, prohibiting a government entity from budgeting more spending from a fund than it has money coming into that same fund.
The second case involved the city not adequately documenting the reason for closed meetings, which is a violation of Section 610.022 of Missouri's Sunshine Law.
In addition to these two issues, Wolfe said that there were two problems that the city needs to address and have been brought to the city's attention in past years.
First, he said that the city did not prepare a complete bank reconciliation each month. Instead it was done on a yearly basis.
This involves not just reconciling the monthly bank statement and checkbook, like most individuals do, but also reconciling the city's bank balance and the general ledger on a monthly basis.
"Waiting until the end of the year will not find problems in a timely manner," he said. "The longer you wait to find a problem, the harder it is to find."
Wolfe said the reason given for not doing this was a lack of time or failing to allocate time to do this.
He told the council that their report recommends that the city look into getting semi-monthly bank statements to reduce the volume of items to be reconciled at once.
The second problem that has been an annual feature of the city's audit is the lack of an adequate segregation of accounting functions.
"We audit about 70 government entities and they all have this problem," Wolfe told the council.
"It is impossible for a small government to have adequate segregation of duties," he said.
He told the council that the city has been working on rectifying this problem, but more needs to be done.
Wolfe told the council that while they were conducting the audit they had trouble getting some of the information that was needed to complete the audit. Although information was requested in February, some of it was not provided until June.
"Not getting information from the city is unacceptable," Russ Kemm said.
"It is unacceptable to be looking at these same problems year after year. We want to get these problems corrected immediately," he said.
In other business the council:
* Approved the reappointment of Terry Ramsey to the IMPACT Tourism board.
* Approved five-year leases to cut hay on three tracts of city property: Tract No. 1, Marmaduke Park area, Robert Bryan for $207 annually; Tract No. 2, the former landfill area; and Tract No. 3, the wastewater treatment plant, Karl Lehman, for a total of $355 annually.
* Approved a $6,469.28 purchase order to JCI, Lee's Summit, to repair the Flygt 3201 pump at the water plant pump station. The pump recently failed during a power failure.
* Voted 3-0, with Dick Meyers and Bill Edmonds abstaining to renew all of the annual liquor licenses.
* Voted unanimously to approve an application from the Nevada Firefighters Local 3031 for approval to hold their annual bootblock at the intersection of Austin and Osage boulevards Sept. 1-4. The proceeds will go to the Muscular Dystrophy Association.
* Passed on first reading a special ordinance approving a partnership program agreement with the Nevada R-5 School District for a school resource officer, with the Nevada school district covering the entire salary and benefits package for the 2006-'07 and 2007-'08 school years.
* Passed on second reading a special ordinance approving an accounting consultation agreement with Diehl, Banwart & Bolton, P.C. to have Terry Sercer, CPA, assist with working out the city's financial problems.
One of Sercer's first jobs will be to look at the Friends of the Parks Fund at the request of Russ Kemm after Joe Kraft presented the council Tuesday night with a list of concerns about money that has been deposited in that fund.
* Passed on first reading a special ordinance approving an agreement with the Missouri Southern State University to provide criminal laboratory services for the Nevada Police Department. The contract cost is based upon the average percentage of laboratory time devoted to cases presented by the Nevada Police Department. The estimated cost for the next year is $9,600, which can be paid in two installments.
* Passed on first reading a special ordinance declaring certain assets as surplus property, including: one 2000 Ford Crown Victoria, one 1999 Ford Crown Victoria, one 1996 Ford Crown Victoria and one Chevy truck, all valued at more than $500. The city also has a variety of other equipment that is valued at less than $500, including 1968 Keiser Army truck 1981 GMC, 10-wheel dump truck, HP Designjet 450C plotter w/extra ink cartridge, Homelite Super2 chainsaw with a 16-inch bar, Snapper riding mower parts, snapper self-propelled push mower, 150KW Kohler generator and transfer switch and a variety of computer printers and other computer parts.
* Held a public hearing and passed on first reading a special ordinance approving the final plat for Clark Avenue, which will run from Austin Boulevard south to Lincoln Avenue on the north edge of the Wal-Mart property.
* Held a public hearing and passed on first reading a special ordinance approving the development agreement for Clark Avenue.
* Passed on first reading a general ordinance amending Chapter 24 of the city code to correct an existing ordinance.
Two years ago the city reduced the maximum height of grass to eight inches, however, that change in the height of grass was not included in several sections of the code. This ordinance corrects that oversight and makes the maximum grass height eight inches in all references in the city code.
* Adopted Resolution No. 1160 adding the 500 and 600 blocks of North Perkins, 300 block of North Adams, east Walnut from Washington to Lynn and the intersection of Prewitt and Maple to the streets included in the 2006 transportation sales tax improvements.
The cost of the original street improvements turned out to be lower than expected, so additional streets had to be added to reach the required $400,000 of improvements.
* Adopted Resolution No. 1161 approving the city applying to become one of the towns selected to be part of the Downtown Revitalization and Economic Assistance for Missouri. This new economic development initiative seeks to assist six to 10 towns with technical assistance and grant funding to revitalize their downtown areas.
* Adopted Resolution No. 1162 adding interim city manager Harlan Moore and interim treasurer as signers for the city's LPL Financial account.
* Adopted Resolution No. 1163 adding interim city manager Harlan Moore and interim treasurer as signers for the city's Edward Jones account.