District R

Audit Finding Resolution Summary
Region R, Southeast Missouri Solid Waste Management District
Date of Final Audit Report: May 3, 1999
For The Fiscal Years: 1992-1997
Date of Final Resolution: Jan. 2000

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 (SWMP) at 573-751-5401.

Audit Finding and Recommendation:
Interest Income Not Reported. Interest income was earned by the district in their checking accounts. The district did not report their interest income and the program did not deduct the interest income from outlays. Total interest earnings for fiscal years 1992-1997 amounted to $16,860. The Department of Natural Resources’ (DNR) General Terms and Conditions (GTC) II.C. states, "Program income shall be deducted from outlays which may be both federal and nonfederal, unless the DNR, as negotiated with the recipient, or federal awarding agency specifies an alternative method in the agreement."

The auditor recommended the program reduce future payments to the district for the interest earned in Fiscal Year 1993 ($171), Fiscal Year 1994 ($2,562), Fiscal Year 1995 ($3,449), Fiscal Year 1996 ($4,704), and Fiscal Year 1997 ($5,974) or that the district obtain permission from the program to use the interest income for administration of the program and future district project grants.

District Response:
The district requested and received approval for use of accrued interest earned in the district grant checking account in the amount of $7,288.31 for use with 1999 projects in order to assist in maximizing funding for the request. The audit states that the district earned some $16,860 in interest funds, with the implication that this was earned off of DNR money. This is not a true statement. The district has assessed dues on its members ranging from $20,000 per year to $60,000 per year, then to $100,000 per year. These funds are kept in a separate account from the grant funds, and the interest earned belongs to the district and not DNR. Thus, the interest is overstated by $9,571.69 as far as any interest earned on DNR funds.

Final Resolution:
The DNR considers Finding 1 resolved. The district has complied with the auditor’s recommendation in accordance with GTC, II.C. in a March 30, 1999, letter to the SWMP. The SWMP agrees with the amount indicated above and gave the district approval for that amount. All documentation will be retained in the district’s permanent file.

Audit Finding and Recommendation:
Unprotected Cash Balance. The month-end cash balance averaged over $234,000 during Fiscal Year 1997. The FDIC insures funds up to $100,000 and the district has an additional $120,000 in pledged securities, however, leaving the remaining balance as a potential loss to the district. The DNR’s GTC, II.E.3. states, "Effective control and accountability must be maintained for all grant and subgrant cash, real and personal property, and other assets." Grantees and subgrantees must adequately safeguard all such property and must assure that it is used solely for authorized purposes. The auditor recommended the district request that the bank pledge additional collateral on its collective cash balance in excess of $220,000.

District Response:
The district planner enclosed a letter that he wrote to the district’s bank on March 18, 1999, concerning the collateralization of funds held by the SWMD. The district did receive a response from the bank indicating that they disagree that there was any under collateralization; however, recent action by the bank resulted in the pledging of $500,000 of collateral for all of the holdings of the SWMD. This is well more coverage than required; however, this provides a very safe margin for funds handled by the district. In checking the actual cash balances, at least according to our records, there was only approximately $7,000 that was not covered by collateralization, and with the expenditure rate of the district, that period of unprotection did not last long.

Final Resolution:
The DNR considers Finding 2 resolved. The district has complied with the auditor’s recommendation in accordance with GTC, II.E.3. in documentation provided to the SWMP on July 26, 1999. The bank has pledged additional collateral so that any future balances in excess of $100,000 will be covered. All documentation will be retained in the district’s permanent file.

Audit Finding and Recommendation:
Final Reports Not Timely Filed – District Grants. The auditor noted that final reports for the district were not submitted to the DNR on a timely basis or at all for project numbers 93011, 94072, 94074, 95018, and 96041. 10 CSR 80-9.050(3)(c) states that "The district shall submit to the department a final report for each project, within thirty (30) days of the project completion date as stated in the financial assistance agreement." The auditor recommended the district be required to submit future reports to the DNR within the time limits allowed by law. The reports should note any subgrantee which has not complied with the reporting requirements.

District Response:
The previous district planner (at the time the exit interview was held) was not aware that the final reports were not filed for project number 93011 and were late in being filed for project numbers 94072, 94074, 95018 and 96041.

The current district planner will ensure their timely submittal. The district is preparing to close out the 1998 grants at this time, and with board approval on July 27, 1999, the district will close out the remaining district subgrants, and the district planner will file a report shortly thereafter for each project within 30 days of the completion date. The district planner that was aboard at the time of the audit had stayed a total of two months as staff to the SWMD and would not have been aware of any requirements concerning reports.

Final Resolution:
The DNR considers Finding 3 resolved. The SWMP does not elect to take further action for non compliance on this finding as this situation is no longer occurring and SWMP believes the district understands and intends to comply with this requirement in all future grant cycles.

Audit Finding and Recommendation:
Proposal Evaluation Not Documented. For fiscal years 1993–1995, the district could not provide documentation to support proposal evaluations. 10 CSR 80-9.050(2)(c) states that "Proposal Review and Evaluation. The executive boards must review, rank, and approve proposals as outlined in this subsection." The auditor recommended the district establish procedures to ensure that the formal proposal evaluation process now in effect remains in accordance with DNR requirements.

District Response:
Having been involved with the district from its very inception in the spring of 1992, the current district planner is not sure that DNR required documentation to support proposal evaluations until more recently. The district has, in fact, provided the documentation for the current year’s applications, and it is on file with the district. The district has established the necessary procedures to ensure formal proposal evaluation and has a Proposal Review Committee to evaluate each project.

Final Resolution:
The DNR considers Finding 4 resolved. The district provided a copy of its current application packet to the SWMP on Jan. 3, 2000, which includes criteria used in the evaluation of applications received. The SWMP does not elect to take further action for non-compliance on this finding as this situation is no longer occurring and SWMP believes the district understands and intends to comply with this requirement in the future. All documentation will be retained in the district’s permanent file.

Audit Finding and Recommendation:
Recycled Paper. The district is not displaying the chasing arrows symbol on documents prepared and released to outside parties. The DNR’s GTC, II.V. required 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. The auditor recommended the district establish procedures to ensure the use of chasing arrows on at least one page of materials distributed to outside parties.

District Response:
During the audit, the previous district planner looked for the recycled paper and found one type of recycled paper and showed the paper to the auditor. It did not have chasing arrows; however, it had a greater recycled content of used paper than the chasing arrows paper. The chasing arrows paper was on hand. The previous district planner simply was not aware of its location. The auditor should have spoken with the Executive Director, who is now the current district planner, instead of a novice staff person’s response to any issue of any severity.

Final Resolution:
The DNR considers Finding 5 resolved. The district has complied with the auditor’s recommendation in accordance with GTC, II.V. in documentation provided to the SWMP on Sept. 28, 1999. All documentation will be retained in the district’s permanent file.