Thomas A.

Schweich
Missouri State Auditor

FOLLOW-UP REPORT ON
AUDIT FINDINGS

City of Brentwood

October 2013 http://auditor.mo.gov

Report No. 2013-109
City of Brentwood
Follow-Up Report on Audit Findings
Table of Contents
State Auditor's Letter 2

Status of Findings*
1.1 Expenditures - Bids..............................................................................3
1.2 Expenditures - Professional Services...................................................3
1.3 Expenditures - Late Fees......................................................................3
1.4 Expenditures - Credit Cards.................................................................4
2. Fire Department Overtime and Timesheets .........................................4
3. Payroll and Leave Records ..................................................................5
4. Additional Compensation ....................................................................6
5. Litigation..............................................................................................6
6. Meeting Minutes..................................................................................7
7. Accounting Controls ............................................................................7
8.2 Fuel and Vehicle Use...........................................................................8
10. Bank Reconciliations ...........................................................................9

*Includes selected findings

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 THOMAS A. SCHWEICH
Missouri State Auditor

To the Honorable Mayor

and
Members of the Board of Aldermen
City of Brentwood, Missouri

We have conducted follow-up work on certain audit report findings contained in Report No. 2013-034,
City of Brentwood, issued in May 2013, pursuant to the Auditor's Follow-Up Team to Effect
Recommendations (AFTER) program. The objectives of the AFTER program are to:

1. Identify audit report findings that require immediate management attention and any other findings for
which follow up is considered necessary at this time, and inform the city about the follow-up review
on those findings.

2. Identify and provide status information for each recommendation reviewed. The status of each
recommendation reviewed will be one of the following:

 Implemented: Auditee fully implemented the recommendation, either as described in the report
or in a manner that resolved the underlying issue.
 In Progress: Auditee has specific plans to begin, or has begun, to implement and intends to fully
implement the recommendation.
 Partially Implemented: Auditee implemented the recommendation in part, but is not making
efforts to fully implement it.
 Not Implemented: Auditee has not implemented the recommendation and indicates that it will
not do so.

Our methodology included working with the city, prior to completion of the audit report, to develop a
timeline for the implementation of corrective action related to the audit recommendations. As part of the
AFTER work conducted, we reviewed the city's action plan, which was created in response to our audit
report and is available on the city's website. We also reviewed supporting documentation submitted by
city officials and held meetings with city officials. Documentation provided by the city included bid
documentation, credit card statements, bank reconciliations, ordinances, employee timesheets, and open
and closed meeting minutes. This report is a summary of the results of this follow-up work, which was
substantially completed during August 2013.

Thomas A. Schweich
State Auditor

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City of Brentwood City of Brentwood
Follow-Up Report on Follow-up
Prior AuditReport on Findings
Prior Audit Findings
Status of Findings
Status of Findings
1.1 Bids The city's bid policy was not followed for several purchases, and bid
documentation was not retained for several other purchases, in violation of
city code.

The city could not locate bid documentation for approximately $3.5 million
of the $3.7 million firehouse construction project. The city eventually
obtained the bid documentation for the remainder of the project from the
project management company. The city had not solicited proposals for
ambulance billing services since 1998. In addition, dental insurance
coverage and life insurance coverage had not been bid in recent years, and
documentation from the last time these benefits were bid could not be
located.

Recommendation The Board of Aldermen ensure bids are solicited for all applicable purchases
in accordance with city code and state law, and sufficient documentation is
maintained.

Status Implemented

The city provided a listing showing that as of August 2013, the city has
solicited proposals for all 18 projects and services which required proposals
per city policy. The requests for proposals are posted on the city's website
and the bid documentation received from potential vendors is maintained on
file at City Hall.

1.2 Professional Services The city had not obtained proposals and written contracts for various
professional services.

Recommendation The Board of Aldermen periodically solicit proposals and enter into written
agreements for professional services.

Status Partially implemented

The city has solicited proposals and entered into written agreements for
accounting and auditing services and is in the process of obtaining
professional benefits broker services. City officials opted to not solicit
proposals for legal services; instead they will continue to follow Section
79.230, RSMo, and City Codes 2-216 and 2-218, which allow the Mayor to
appoint legal counsel with the approval of the Board.

1.3 Late Fees Fuel bills were not paid timely and late fees and/or finance charges were
often incurred. The city had trouble meeting the short timeframe between
billing and payment due dates of the fuel vendor.

Recommendation The Board of Aldermen implement procedures to ensure bills are paid
timely.

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 City of Brentwood
Follow-up Report on Prior Audit Findings
Status of Findings

Status Implemented

The city worked with the fuel vendor to change the payment due date from
10 days to 21 days after billing date. In addition, we reviewed the monthly
fuel statements from April 2013 through July 2013 and noted no late fees
were assessed to the city.

1.4 Credit Cards The city did not maintain adequate documentation for some credit card
purchases. In addition, the city had not implemented the recommendations
related to this issue made in multiple audit reports by its independent CPA
firm.

Recommendation The Board of Aldermen ensure adequate supporting documentation is

retained for all credit card expenditures.

Status Implemented

The Finance Director indicated she reviews all credit card statements and
ensures each charge listed has supporting documentation. We reviewed
credit card statements for February, May, and July 2013 and all charges had
supporting documentation.

2. Fire Department The city required the fire department to submit only summary overtime
Overtime and reports to the city finance department, rather than detailed timesheets,
despite a recent legal settlement with the firefighters union regarding excess
Timesheets overtime payments. In addition, the city did not have adequate
documentation related to a legal settlement with the firefighters union over
excessive overtime payments.

Recommendation The Board of Aldermen ensure documentation is maintained for all

significant city decisions, particularly legal settlements. In addition, the
Board should require detailed timesheets be submitted to the finance
department.

Status Implemented

City officials indicated they have not had any significant legal decisions to
address since the audit report was released, but will ensure all related
documentation is retained as appropriate in the future. The city now requires
all employees to submit detailed timesheets each pay period. We reviewed
the July 2013 timesheets and timecards that were submitted to the payroll
section and the time records were appropriately detailed and signed by the
proper individuals. In addition, the city is in the process of implementing an
electronic time and attendance module that will allow all timekeeping to be
automatically submitted to the finance department's payroll section
electronically each pay period. Currently, just the administration department

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 City of Brentwood
Follow-up Report on Prior Audit Findings
Status of Findings

is on the new system. The city expects the new system to be fully
implemented by the spring of 2014.

3. Payroll and Leave The city lacked adequate supporting documentation related to several
Records payroll areas and some problems were noted with overtime and leave
records.

3.1 Building official Records related to an employee serving in two positions for the city from
March 2009 through July 2011 were not sufficient to ensure appropriate
compensation was paid.

Recommendation The Board of Aldermen ensure accurate documentation is maintained of

time worked by all city employees.

Status Implemented

The city is currently not aware of any situations where an employee is

serving in two positions. All city employees are now required to submit a
timesheet or timecard. The July 2013 timesheets and timecards were
reviewed and the time records were appropriately detailed and signed by the
proper individuals.

3.2 Personnel policies The city was not always in compliance with its overtime policy and Fair
Labor Standards Act (FLSA) requirements. In addition, the city was not
consistent regarding when overtime was paid out to employees.

Recommendation The Board of Aldermen ensure compliance with the city's overtime policy
and the FLSA.

Status In Progress

Once the electronic time and attendance module (discussed in the status for
finding number 2) is fully implemented, it can be programmed to calculate
overtime based on the FLSA provisions and city policy. The city is currently
in the process of revising its overtime approval policy.

3.3 Timesheets Timesheets were prepared by employees; however, some timesheets were
not signed by the employee and some did not indicate review and approval
by the supervisor.

Recommendation The Board of Aldermen ensure adequate reviews of timesheets are

performed, timesheets are signed by the employee and their supervisor, and
timesheets are submitted to the finance department.

Status Implemented

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 City of Brentwood
Follow-up Report on Prior Audit Findings
Status of Findings

The July 2013 timesheets and timecards were reviewed for sufficient details
and the signatures of the employee and applicable supervisor. The
timesheets and timecards were appropriately detailed and signed by the
proper individuals.

3.4 Employee leave and Documentation of some leave benefits accumulated and used and the
compensatory time remaining balances was not maintained in a centralized location.

Recommendation The Board of Aldermen ensure employee leave and compensatory time
balances are properly tracked and monitored and maintained in a centralized
location.

Status Implemented

Effective May 2013, all city departments were required to submit leave and
compensatory time balances to the Human Resources Manager. Each month
the manager, using information from employee time records, enters each
employee's leave and compensatory time usage and accruals into a computer
program and sends monthly reports to all departments. A leave balance
report dated August 7, 2013, was reviewed and all employees had balances
in compliance with city policy.

4. Additional The city had a perfect attendance program. Employees received $50 each
Compensation quarter they had perfect attendance. They also received an additional $200
for an entire calendar year of perfect attendance.

Recommendation The Board of Aldermen discontinue granting additional pay to employees

for tasks performed as part of their normal job duties.

Status Implemented

In June 2013, the Board of Aldermen passed Ordinance No. 4444, which
discontinued the perfect attendance program. The city indicated the
employee handbook will be amended to reflect discontinuation of the
program.

5. Litigation The city did not take adequate and timely action to correct an issue with
underfunded bond accounts for a redevelopment project. Coding errors of
sales tax collections resulted in the underfunding of bond accounts by
approximately $460,000, leaving the bank unable to collect applicable fees
and forcing the city to obtain a loan to satisfy the underfunding. The loan
was repaid in October 2010, with interest costs of approximately $13,500.

In addition, after an attempt by the bank to declare the bonds in default, the
developer filed a lawsuit against the bank and the city, resulting in legal

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 City of Brentwood
Follow-up Report on Prior Audit Findings
Status of Findings

expenses of approximately $260,000 for the city. The lawsuit was settled in
September 2011.

Recommendation The Board of Aldermen ensure sufficient procedures are in place to monitor
sales tax revenues of businesses collecting sales taxes on behalf of the city
and make proper payment of bond issue obligations.

Status Implemented

A monthly report is compiled for each Transportation Development District,

which lists the retailers and sales taxes received each month. The report is
based on information received from the Missouri Department of Revenue. A
memo is also given to the bond trustee each month directing what amount
should be transferred to each bond account.

6. Meeting Minutes Open meeting minutes did not document the specific section of law that
allows for a closed meeting for any of the 12 closed meetings held in 2011;
and the open meeting minutes for October 3, 2011, did not give any reasons
for the closed session. In addition, the city did not maintain minutes of
closed Board meetings.

Recommendation The Board of Aldermen ensure minutes are prepared and retained to support
all closed meetings and the specific reason, statute, and subsection allowing
closure is noted in the open meeting minutes.

Status Implemented

The minutes for the July 15, 2013, open and closed meetings and the
minutes for the August 5, 2013, closed meeting were reviewed. The closed
meeting minutes were organized and provided sufficient information, and
the open meeting minutes contained the specific reason, statute, and
subsection for allowing the meeting closure.

7. Accounting Controls Accounting controls in the finance department were in need of

improvement.

7.1 Segregation of duties Payroll duties and receipting duties related to General Fund financial
activity were not adequately segregated or reviewed. In addition, there was
no review performed of the General Fund bank reconciliation by the
Finance Officer.

Recommendation The Board of Aldermen segregate the accounting duties of the finance
department to the extent possible. If proper segregation of duties cannot be
achieved, documented supervisory or independent reviews should be
performed.

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 City of Brentwood
Follow-up Report on Prior Audit Findings
Status of Findings

Status Implemented

Bank reconciliations are now required to be signed by the employee

performing the reconciliation and the employee reviewing the
reconciliation. In addition, the Finance Director reviews monthly payroll
reports. The reports include any changes that were made in the payroll
program during the month. The July 2013 bank reconciliations were
reviewed and contained the signatures of the preparer and applicable
supervisor. The July 2013 payroll report was reviewed and was signed by
the Finance Director. Also, the city has hired an accounting firm to perform
a review of internal controls and conduct risk assessments, and this review
is scheduled to begin in October 2013.

7.2 Receipting and Monies were not promptly receipted or recorded in the accounting system,
depositing and were not always deposited intact and timely. Upon receipt monies were
secured, but receipt slips were not issued and monies were not posted to the
computer system until the deposit was prepared. In addition, checks were
not restrictively endorsed until the deposit was prepared.

The numerical sequence of receipt slips was not accounted for properly. The
finance department and the planning development department shared the
financial computer system receipting program. The system assigned the next
available receipt slip number to a user, but the two departments were not
accounting for the numerical sequence of these receipt slips.

Recommendation The Board of Aldermen ensure monies are promptly receipted and posted to
the computer system, and checks are restrictively endorsed immediately
upon receipt. In addition, the numerical sequence of receipt slips should be
accounted for properly.

Status Implemented

The August 2013 receipt and deposit records were reviewed and monies are
promptly receipted, posted, and deposited. Deposits were made daily,
ensuring that checks are restrictively endorsed each day. Each time a deposit
is made a numerical sequence of receipt slips report is generated and
reconciled to the deposit.

8.2 Fuel and Vehicle Use The city had not established effective monitoring procedures regarding fuel
and vehicle use.

The city did not maintain logs of fuel pumped from bulk diesel fuel tanks or
usage logs for vehicles that used the pumps. The city did not maintain logs
of fuel pumped for vehicles fueled using fuel cards or on account with local
gas stations.

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 City of Brentwood
Follow-up Report on Prior Audit Findings
Status of Findings

Although the city's written accounts payable procedures required receipts to

be submitted to the finance department for fuel card purchases and fuel
purchases made on account, supporting receipts were on file for only the
October 2011 local gas station invoice and for none of the fuel card
invoices. An adequate review of these fuel invoices compared to receipts
was not performed to ensure purchases were accurate and for city business.

A usage evaluation to determine if the number of vehicles was necessary

and justified had not been performed.

Recommendation The Board of Aldermen establish adequate records and procedures to

effectively monitor vehicle and fuel use. Bulk fuel inventory records should
be maintained, invoices should be reviewed and approved, and fuel use
should be reconciled to fuel purchases. Any discrepancies should be
investigated. The Board should also ensure receipts for fuel purchases are
submitted to the finance department and reconciled with fuel invoices. In
addition, the Board should evaluate vehicle usage to determine if all
vehicles are needed.

Status Implemented

Fuel logs are now maintained. Each time a vehicle is fueled, the date, driver,
vehicle, mileage, starting and ending meter readings, and total gallons
pumped are entered on the log. Several fuel logs were reviewed and all
necessary information was included in the logs. The bulk fuel tanks are now
locked when not in use. In 2012, the city implemented a driver fuel card
policy that cardholders must sign before being given a fuel card. The policy
requires each cardholder to have unique personal identification number and
details the steps that must be followed when using the fuel card. Fuel
receipts are submitted to the finance department and reconciled with the
monthly fuel card statements. The April through July 2013 fuel card
statements were reviewed. All fuel purchases on the statements had
supporting documentation. The statements were also signed by city officials
indicating their review. In May 2013, a vehicle committee was created and
developed a vehicle replacement policy and schedule. The city indicated the
committee's comprehensive review of vehicles will be incorporated into the
2014 budget process.

10. Bank Reconciliations The city's bank reconciliations were not prepared timely. 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. In addition, the
city did not routinely and timely follow up on outstanding checks.

Recommendation The Board of Aldermen ensure monthly bank reconciliations are performed
timely and outstanding checks are followed up on appropriately. In addition,

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 City of Brentwood
Follow-up Report on Prior Audit Findings
Status of Findings

any discrepancies should be investigated and resolved with appropriate

adjustments made to the accounting records.

Status Implemented

Bank reconciliations are now performed timely. The July 2013 bank
reconciliations for the general account and payroll account had been
completed as of our August 2013 follow up meeting. The Finance Director
documented her review of the general account reconciliation on August 5,
2013, and her review of the payroll account reconciliation on August 12,
2013.

On August 13, 2013, the city sent letters to the payees of old outstanding
checks, requesting a status update on those checks.

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