District C

Final Audit Resolution Summary
Region C, Northeast Missouri Solid Waste Management District
Date of Final Audit Report: June 18, 1998
For the Fiscal Years: 1991, 1992, 1993, 1994, 1995, 1996, 1997
Date of Final Resolution: January 5, 2001

Note.gif (986 bytes) This document is a summary of the actual findings and resolutions determined by this audit. The document is posted here for informational purposes only and not all data from the audit is included here. A complete copy of the audit material may be requested under Section 610, Revised Statutes of Missouri and can be obtained by contacting the Solid Waste Management Program at 573-751-5401.

1.  Audit Finding and Recommendations: Inappropriate Composition and Operation of the District Council and Executive Board.
During the period of formation of the district several organizational meetings were held. The decision was made to establish the district based on the requirements of Senate Bill 530. However, some variances from the required composition of the board were made. The executive board composition does not appear to comply with RSMo, 260.315. In addition, the district did not have sufficient records to support the terms of most of the council members. The auditor recommended the district obtain the required appointments to reconstitute the council and establish a system to track council and board terms.

District Response:
The district provided to the department’s Solid Waste Management Program (SWMP) on January 28, 1999, copies of the signed resolutions which indicated that the city and county agreed to administer the district by an alternative management structure. On July 2, 1999, the district also provided a copy of the March 24, 1999, executive board meeting minutes in which the council/board were reelected and all previous board decisions were reapproved to comply with RSMo 260.300, .315.

Final Resolution:
The department considers Finding 1 resolved. The district provided to the department’s SWMP on January 28, 1999, resolutions indicating the district was administering as an alternative management structure and meeting minutes supporting previous board decisions as required by RSMo, 260.300, .315. All documentation will be retained in the district’s permanent file.

2.  Audit Finding and Recommendation: Failure to Adopt and Implement Required Policies.
No policies were adopted in the following areas: Procurement, Non-discrimination, Environmental Standards, Debarment/Suspension, Disadvantaged Business Enterprises, or Compliance with General Terms and Conditions (GTC) of grants. The district has not prepared or filed Form 334 relating to Disadvantaged Business Enterprises. The GTCs for state grant funding require the district to adopt and implement these policies: Procurement, GTC, II.N, Non-discrimination, GTC, I.A, Environmental Standards, GTC, I.B, Debarment, GTC, II.S. and Disadvantaged Business Enterprises and Form 334, GTC, II.W.

District Response:
The district was, under the impression that it had bound itself to all of these policies, and additional policies, through annual signature of Financial Assistance Agreements containing the GTC and through its own By-Laws.

Final Resolution:
The department considers Finding 2 resolved. The district provided to the department’s SWMP on May, 26, 2000, approved policies as required by GTC, I.A., B., II.N., and II.S and has been providing form 334 quarterly. All documentation will be retained in the district’s permanent file.

3. Audit Finding and Recommendation: Failure to Obtain Approval for Service Contract.
The district entered a series of service contracts with the Northeast Missouri Regional Planning Commission/Rural Development Corporation for management services. No notification was made to the department and no approval was received prior to entering the contract. The auditor recommended the district should notify the department and receive approval as required.

District Response:
The district indicated during the June 22, 1999, audit resolution meeting that copies of all service contracts will be provided to the department’s SWMP.

Final Resolution:
The department considers Finding 3 resolved. The district provided to the department’s SWMP copies of service contracts between the Northeast Missouri Regional Planning Commission/Rural Development Corp and itself July 2, 1999, to comply with GTC, II. N. An approval letter from the department’s SWMP was sent to the district on May, 15, 2000. All documentation will be retained in the district’s permanent file.

4.  Audit Finding and Recommendation: Failure to Use Post Consumer Content Paper.
The district is using recycled paper but post consumer content amount was unverifiable. The department’s GTC, II.V. requires the use of recycled paper consisting of at least 50 percent waste paper and that the chasing arrows symbol representing the recycled content of the paper be displayed on at least one page of any materials provided to outside parties other than the department. The auditor recommended the district obtain the department’s consideration and/or waiver of the 50 percent rule and establish procedures to ensure the use of the chasing arrows on at least one page of materials distributed to outside parties.

District Response:
The district has always attempted to use recycled paper; however, the paper used did not specify the percentage of post consumer content. The district has now procured the required paper. A copy of the purchase invoice as well as the package label will be provided to the grants manager.

Final Resolution:
The department considers Finding 9 resolved. The district provided documentation to the department’s SWMP on May 26, 2000, supporting its use of the proper percentage of consumer content paper with the chasing arrows symbol as required in GTC, II.V. All documentation will be retained in the district’s permanent file.

5.  Audit Finding and Recommendation: Failure to Print the Recycle Symbol on Required Materials.
Printed materials prepared by the district were not printed on recycled paper and did not display the recycled paper symbol on at least one page. The GTC, II.V, require the use of recycled paper and the printing of the recycled symbol on at least one page of printed material. The auditor recommended that the district ensure that recycled paper is used for all documents and the recycle symbol is printed on at least one page of all materials.

District Response:
The district has always attempted to use recycled paper with the chasing arrow symbol on the paper. The district has implemented this recommendation and has placed the symbol on all correspondence created and distributed by the district. The district submitted their responses on letterhead with the symbol.

Final Resolution:
The department considers Finding 5 resolved. The district provided to the department’s SWMP on July 2, 1999, several copies of correspondence displaying the chasing arrow symbol as required by GTC, II.V. All documentation will be retained in the district’s permanent file.

6.  Audit Finding and Recommendation: Failure to Establish an Education Program.
The district has applied for two district grants to establish a public education program. The auditor recommended that the district should complete the education program already funded by the end of the fiscal year 1998 district grants cycle. Or the district will establish an education program during the 1999 fiscal year district grant cycle as required by RSMo, 260.320.3(4). If the district intends to complete the education program already funded, timely Quarterly Status Reports to the district grant manager will track the progress of the report.

District Response:
The district indicated that the education program already funded will be complete by June 30, 1999. Quarterly status reports to date have been provided to the department’s SWMP. To date, the project is still open. Twenty-nine school loan kits have been developed, used, and improvement suggestions recommended to the district. It is anticipated that the project will be finalized by October 2000.

Final Resolution:
The department considers Finding 6 resolved. The district has provided to the department’s SWMP the required quarterly reports indicating the projects progress as required by RSMo, 260.320.3(4). The department’ s SWMP does not elect to take further action for non-compliance on this finding as the district is complying with this requirement. All documentation will be retained as part of the district’s permanent file.

7.  Audit Finding and Recommendation: Failure to Adopt and Implement Conflict of Interest Policies. 
The district has made no positive efforts to adopt a conflict of interest policy or to request information regarding council or board members. RSMo, 260.320 (5) and the General Terms and Conditions, II.Q refer to these conflicts and required the district to ensure that there are no conflicts on the board or in the process of awarding grants. The auditor recommends that the district develop and implement a policy and ensure all board members are aware of the policy and no previous decisions were conflictive.

District Response:
The district executive board will review sample policies and discuss adoption of a conflict of interest policy. A copy of the policy and meeting minutes confirming adoption will be provided to the grants manager during the June 22, 1999, audit resolution meeting.

Final Resolution:
The department considers Finding 7 resolved. The district provided to the department’s SWMP on April 5, 2000, a copy of the adopted policy as required by RSMO, 260.320 (50 and GTC, II.Q. with supporting executive board meeting minutes approving the policy. All documentation will be retained as part of the district’s permanent file.

8.  Audit Finding and Recommendation: Inappropriate Handling of State Funded Equipment.
Title to grant funded equipment has been vested in the subgrantee with a lien registered in the district’s name in some cases. The district has not maintained records of any equipment funded with state grant funds. The district has used an arbitrary method of determining the value of grant funded equipment. The GTCs for district grants, as modified by the Special Terms and Conditions, GTC, II.J, requires that equipment title be vested in the district. Inventory records of grant funded equipment are required to be maintained. When equipment is no longer to be used for the grant purpose, the fair market value of the equipment is to be used in determining the disposition of the equipment. The auditor recommended the district retain ownership of all state grant funded equipment during the time the grant is in effect. Maintain records of the equipment including location, use, serial number, date of the purchase, cost, etc. Account for the fair market value at the time of the grant or program conclusion.

District Response:
The district indicated that the auditor’s report stated that "the district has not maintained records of any equipment funded with state grant funds." The district disagrees with this. The district has always required a Certificate of Title or Uniform Commercial Credit (UCC) filing be submitted to the district before the grantee may receive reimbursement for equipment purchases. The title or UCC must designate the solid waste management district as lien holder for said equipment. The auditor was provided this information.

The auditor also states that "it is not possible to determine the location or identity of some of the equipment or whether it is still being used for the grant purpose." A site visit was scheduled for the purpose of monitoring equipment. Each item that the auditor requested to see was accounted for, presented to him, and currently being used for the original purpose. Previous year grant funded equipment was also pointed out to him but the auditors comment was that the district had poorly utilized grant funds and made a poor decision when it funded a chipper/shredder project.

Regardless, the district has developed an inventory form. The form includes the programs recommended information: the program’s issued project number, physical location, intended/approved use, district serial number, purchase date, item cost, equipment description, property source and life estimate as well as an area for monitoring insurance coverage. This form will be attached to future subgrantee Financial Assistance Agreements (FAA). Submittal of the form from the subgrantee will be required before reimbursement is released for purchases exceeding $1,000. Copies will be provided to the grant manager.

Final Resolution:
The department considers Finding 8 resolved. The district provided to the department’s SWMP on April 5, 2000, a grant funded equipment policy as required by GTC, II.J. and the October 21, 1999, executive board meeting minutes in which the policy was approved. Copies of the district’s completed inventory records were provided to the department’s SWMP on May 16, 2000. All documentation will be retained in the district’s permanent file.

9.  Audit Finding and Recommendation: Lack of Board Involvement in Internal Control Activity.
The executive board has met only twice since the formation of the district. There is little or no supervision of the internal controls for financial matters. The GTC, II.E, requires the district to provide an adequate financial management system. The auditor recommended that the executive board have regular and more frequents meetings so that financial and operational controls can be maintained.

District Response:
The district meets on an as needed basis. At a minimum meetings are held to review grant applications and select grant recipients, close-out grants and hold board member elections. This works the best for District C. The board tends to lose interest when meetings are held regularly but there isn’t pertinent district business to discuss.

Final Resolution:
The department considers Finding 9 resolved. The district has provided to the department’s SWMP copies of executive board meeting minutes as they have occurred as required by GTC, II.E. The department’ s SWMP does not elect to take further action for non-compliance on this finding. All documentation will be retained in the district’s permanent file.

10.  Audit Finding and Recommendation: Failure to Perform or Document Bank Reconciliations. 
Bank reconciliations or documentation reconciliation were not performed or reviewed and approved by the executive board. The GTC, II.E, requires the district to provide an adequate financial management system. The auditor recommended that the district have bank reconciliations completed monthly by someone with no access to cash receipts and disbursements and reviewed by the district treasurer.

District Response:
The Assistant Fiscal Officer of the Northeast Missouri Regional Planning Commission currently reconciles the monthly bank statements which are received directly from the bank via US mail. All deposits have always been made by the District Chairperson. Documentation for disbursement’s are:

    • routed to the District Coordinator.
    • coordinator then associates the disbursement with the proper grant and/or fund to assure the disbursement has been approved by the executive board. An executed subrecipient/District Grant Agreement or Contract for Services (within the scope and budget) is considered an approval for disbursement.
      • the coordinator then calculates 15 percent retainage if applicable,
      • records required information to the proper ledgers,
      • prepares a payment request, and forwards it to the fiscal officer.
    • the fiscal officer prepares a check for signature.
    • the check is forwarded to two (2) of three (3) board members authorized to sign checks.

Presigning of checks in advance of purchases or making a check out to "cash" is not an allowable procedure. These procedures will be discussed and adopted as standard procedures at the next board meeting.

Final Resolution:
The department considers Finding 10 resolved. The district provided to the department’s SWMP on April 5, 2000, the above referenced procedure as approved as policy and a copy of the October 21, 1999, executive board meeting in which it was approved as required by GTC, II(E), 2.3 and 3. All documentation will be retained in the district’s permanent file.

11.  Audit Finding and Recommendation: Failure to Maintain Accounting Records on the basis of Generally Accepted Accounting Principles.
The district’s accounting records are maintained on the cash basis. The district has made no effort to determine the method of accounting for subrecipients. 10 CSR 80-9.050 requires that the records of grant recipients and subrecipients be maintained on the basis of generally accepted accounting principles. The auditor recommended the district provide a full Generally Accepted Accounting Principles system for the district and ensure that subrecipients are on that basis of accounting as well.

District Response:
The district’s funds and accounting records are currently and have always been audited by a CPA as a part of the annual audit of the Northeast Missouri Regional Planning Commission and Rural Development Corporation. Therefore, the solid waste management district feels that this is an unnecessary audit finding and recommendation.

Final Resolution:
The department considers Finding 11 resolved. The district provided to the department’s SWMP on June 22, 1999, an independent audit performed by a CPA for the Northeast Missouri Regional Planning Commission and Rural Development Corporation which is the contracted administering entity of the solid waste management district as required by 10 CSR 80-9.050. The report indicates that the entity is maintaining accounts in accordance with the principles of fund accounting. All documentation will be retained in the district’s permanent file.

12. Audit Finding and Recommendation: Failure to Establish Cash Management Procedures. 
The district has requested state grant funds prior to the time the funds are needed and prior to the time the related expenditures have been made. District Grant 96102 was funded two to four months prior to the related payout to subgrantees. District Grant 97019 was funded in May 1997 and no activity had been initiated prior to the audit date. The Special Terms and Conditions (STC) 1, requires the district to "report project expenses and submit standard invoices, attached to the agreement, for payment." The auditor recommended that the district establish cash management policies and procedures to more closely match the cash requirements of the district to cash draw downs.

District Response:
The district has always understood that the department preferred the district to drawdown the full amount of the approved funding at the beginning of each grant cycle. If this were not the case, the alternative would be to request funds from the department as subgrantees submit request for funds to the district. The district does not feel that a specific policy needs to be developed to drawdown funding.

Final Resolution: 
The department considers Finding 12 resolved. The district provided to the department’s SWMP on July 2, 1999, correspondence indicating it was committed to making every effort to spend district grant funds as expeditiously as practical as recommended by the contracted auditor as required by the STC 1. The department’s SWMP does not elect to take further action for non-compliance on this finding. All documentation will be retained in the district’s permanent file.

13.  Audit Finding and Recommendation: Failure to Use Grant Money as Proposed
District Grant 93056 was proposed by the Northeast Missouri Regional Planning Commission and was described as a public education grant with money to be used to develop educational materials for high school curriculum. The money was spent to clean up roadside dumps in several counties by covering the expense of county heavy equipment. The GTC, II.G, require prior approval for and budget changes or changes in the scope of work. The auditor recommended that the district return the funds inappropriately spent.

District Response:
A copy of past board minutes specifically approving this change in scope can not be located. The district could not find documentation of discussions concerning selecting locations for the demonstration projects and reminders for participants to get started and/or complete their projects. The issue would be presented at the next board meeting. If the board approved the previous change in scope for this project, a copy of the minutes approving such will be provided.

Final Resolution:
The department considers Finding 13 resolved. The district provided to the department’s SWMP on June 22, 1999, a copy of the executive board meeting minutes approving the subgrantee’s change in scope as required by GTC, II. G. The department’s SWMP does not require the district to refund the questioned $24,921.67 because the district provided a valuable solid waste activity that enhanced the quality of life in its area. Though not the original intent of the project, by discussing and approving the change and providing activities that accomplish requirements of the solid waste management law, the department’s SWMP contends the funds were spent for appropriate activities. All documentation will be retained in the district’s permanent file.