The Missouri State Auditors Office has released its findings from a petition audit it conducted on the Village of Butterfield. The audit results are very critical of village operations, concluding that Butterfield is in a "declining financial condition" as a result of overspending and inadequate oversight by the Board of Trustees.
The audit process began in April after the State Auditor's Office received a petition audit request signed by 39 registered voters living in the Butterfield city limits. The scope of the audit covered the year that ended Dec. 31, 2005.
In addition to concerns of overspending, the audit also targeted several other inadequacies and weaknesses that are highlighted below.
The village prepares annual budgets; however, they are not complete and are not used to monitor the village's financial position. Actual expenditures exceeded budgeted amounts in several funds.
Procedures have not been established to ensure expenditures are properly allocated among the various funds and to ensure restricted revenues are spent only for their intended purpose.
The Village Clerk (Georgia Wenell) transferred $12,000 during 2005 from the Water and Sewer Fund to the General Fund without the board's approval. The transfers were made to pay back a portion of the $15,000 originally transferred to the Water and Sewer Fund to cover expenditures but no documentation was in place to support this action.
Village checking accounts require two signatures on checks; however, nine checks for transfer of funds between accounts totaling $17,207 were issued with only the village clerk's signature.
The village maintained 11 checking accounts as of Dec. 31, 2005, and does not effectively monitor the bank account balances. The auditor discovered there was $48,499 in eight non-interest bearing accounts.
The village has not bid banking services and does not have a written agreement with its depository bank.
The village did not have a formal bidding policy. During the year ending Dec. 31, 2005, bids were either not solicited or bid documentation was not retained for some purchases. Adequate supporting documen-tation was not available for 31 percent of expenditures reviewed.
The Village Board of Trustees does not review and approve payment of village expenditures prior to the disbursements being made, and complete mileage logs were not maintained for vehicles.
The village's financial statements reported that its water and sewer system operated at a loss in 2004 through May 2005. In June of 2005, the Board of Trustees raised water and sewer rates by 114 percent with no documentation to support how the board calculated the significant rate increase. Rates were decreased by 20 percent in December of 2005 without documentation or a formal review.
The village does not perform monthly reconciliations of amounts billed, payments received and amounts remaining unpaid for utility services including water, sewer and trash, and there is no supporting documentation or independent approval of credit adjustments made to utility accounts.
The audit report also included recommendations related to meetings and minutes, personnel policies and proce-dures, financial reporting, capital assets and municipal court controls and procedures. In all, the report includes 21 pages of audit findings and the auditee's response to those findings.
Since the audit was initiated, Butterfield has become a fourth class city.
Individuals who served on the Board of Trustees during the time of the audit period included: Louis Shultz, Jim Dunivant, Tony Cope, Kendal Christiansen, Frances Hobbs, Jean Schoelzel-Feer, Steve Fisher, Don Roberts, Adam Wells and Carrol Hayes.
Current city officials include Mayor Tony Cope and aldermen Carrol Hayes, Gary Florer, Frances Hobbs and Rowena Higgs.
The mayor and council members responded to each audit concern in writing and stated their intention to follow audit recommendations. Several of Butterfield's accounting practices have already been modified in response to audit findings.
For example, a formal bidding policy was adopted on Dec. 27, 2005. This new policy requires that bids be solicited and bid documentation be retained for all major purchases.
Butterfield city officials also indicated their intention to conduct a formal rate study to review water and sewer rates.
Copies of the Village of Butterfield auditor are available to public. The audit can be accessed on-line at www.auditor.mo.gov.