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Audit Recommendations and Progress Updates
On August 18, 2015, the Missouri State Auditor released their audit of the City of Joplin. The complete audit report can be found by following this link (opens in new window). Additional information and an update on where we stand with implementing their recommendations is provided below. Please check back periodically for new updates and/or information, which will be highlighted in red. Also, please note that the city's responses included below are abbreviated to omit the background information pertaining to each finding; you can refer to the full report for the city's complete responses.

The follow-up report issued by the Missouri State Auditor has been released, and can be found by following this link (opens in new window). Under the Update column below, we have listed the status of each finding contained in the follow-up report.

 Audit Recommendation (Abbreviated) City Response Update
1.1 Ensure future evaluation committees are independent and free of potential conflicts of interest before awarding contracts, and prepare adequate documentation to support the points awarded to respondents. If a committee is used by the city in the future, the city will endeavor to make sure the committee is independent, free of any conflicts of interest and follows an independent selection process. The city strives to create bid documents that are fair and equal to all bidders. The city also has a selection process that includes multiple persons that review and score the bid responses. The city will take additional steps to ensure that the bid and selection process is fair and equal for all bid requests and that proper documentation is retained. Status - In Progress

The auditor's recommendations have and will continue to be implemented as the situation warrants. No further action is required.
1.2 Ensure all major contracts include appropriate deadlines and liquidated damages, are properly monitored, and properly safeguard city interests. The Council should recover questionable amounts paid to Wallace Bajjali. [T]he city will ensure future contracts protect city interests. The city will also implement new policies to better monitor the progress of contracts to ensure that compliance and deadlines are properly enforced.

Regarding pursuit costs, the city reimbursed Wallace Bajjali 50 percent of its pursuit costs, not to exceed $1 million, pursuant to the predevelopment agreement. The city verified receipts and documentation before reimbursing Wallace Bajjali. The city feels that its payments complied with the predevelopment agreement.

The court awarded the city a $1.475 million judgement against Wallace Bajjali. The judgement consists of $1 million in pursuit costs and $475,500 in land assemblage fees.
Status - In Progress

The agreement with Wallace Bajjali has been terminated. Contract language for other agreements have been updated per the auditor's recommendation. No further action is required.
2.1 Ensure independent appraisals are obtained and adequately research previous real estate transactions for all future real estate purchases. The Council should also ensure the JRC documents its reasons for disparities between appraised values and purchase prices of real estate. The JRC should have been better instructed on the use of appraisals and other mechanisms to protect its business dealings. The JRC will ensure that future real estate purchases are supported by independent appraisals. Status - In Progress

It is not anticipated that the JRC will need to serve as a land-bank to purchase properties for (re)development in the future. No further action is required.
2.2 More closely examine transactions to identify and avoid apparent and actual conflicts of interest, and prohibit the use of city authority for private purposes. City officials should ensure strict compliance with state law and city charter and ordinances when conducting city business. The city should further investigate whether Councilmember Woolston's actions represent conflicts of interest and cooperate with any law enforcement agency's investigation into the matter. The city will implement a policy to annually update staff and Council on conflicts of interest and ethical rules of conduct. The city will cooperate fully with any outside investigation into Councilmember Woolston's actions. The Council recognizes its responsibility to address the allegations of any conflicts of interest.
Status - Implemented
2.3 Ensure compliance with future agreements, and consider not entering into such agreements when the buyer does not have financing in place. The city will ensure compliance with future agreements. Further, the city does not envision entering into any such agreements. Status - In Progress

No further action is required at this time.
3.1 Consider hiring additional staff or reassigning duties of existing staff, and ensure procedures are in place to request reimbursements timely. The City has given the public periodic updates on the status of the reimbursement process.

The cleanup and rebuilding effort of city damaged or destroyed property is being funded by several sources. This includes FEMA, SEMA, State CDBG, as well as insurance proceeds. As a result, the reimbursement requests for the various sources must be completed together to ensure accurate reimbursements are requested and received from the appropriate source. Inaccurate reimbursements could result in the city being required to return funds to federal and/or state agencies as a result of future audits of these proceeds.

The Council is confident current city staff will meet the reimbursement deadlines for these requests. Also, the Council believes it is imperative the requests are accurate, in order to avoid any future repayment by the city.
Status - Implemented

All insurance proceeds have been received and placed back into the funds where expenses were incurred. As of March 16, 2016, requests for reimbursement from SEMA/FEMA have also been submitted.
3.2 Ensure documentation for insurance claims is submitted timely. See response to 3.1 above. Status - Implemented 
3.3 Establish plans to address the potential duplication of benefits caused by the collection of both special tax bills and federal assistance for demolition costs. The Council should also actively pursue collection of duplication of benefits from property owners and their insurance carriers related to debris removal, and work with FEMA to resolve any duplication of benefits. Where federal or state funds are being utilized by the city for demolition and cleanup, the city will terminate any existing outstanding special tax bills and refunds will be issued for any payments received prior to the city receiving any payment from federal or state agencies. The city has already begun the process of terminating existing special tax bills for demolition and cleanup.

        
Status - In Progress
3.4 Ensure city policy and federal requirements related to the suspension and debarment of vendors are followed. The city will follow the existing purchasing policy and document the review of suspension and debarment of vendors. Additionally, the city will ensure contracts include the appropriate suspension and debarment clauses. Will be implemented.
3.5 Ensure performance bonds are obtained on public works projects as required by state law. The city has allowed the substitution of a letter of credit for a performance bond. The city obtained a letter of credit for the soil remediation contract. The city was unaware a substitution is not allowed under State Statute. In the future, the city will comply with State Statute and obtain a performance bond for all public works contracts over $50,000. Will be implemented as contracts are brought forward to council for approval.
3.6 In the future, ensure mutual aid expense reimbursement criteria is clearly established and consistently addressed in both letters and agreements. Immediately following the tornado, while the city was dealing with the cleanup from the disaster, the city was informed it had to develop a mutual aid agreement for all of the various responding agencies. The city used the standard federal language for the mutual aid agreement.

The city has accepted the finding and recommendation of the State Auditor and has since updated the language in the existing mutual aid agreements to give the city any flexibility needed to reimburse responding agencies, while protecting the city finances.
Mutual aid agreements are an evolving and ongoing issue. Departments will work on updating language with respective local, state and federal agencies.
4.1 Ensure closed session minutes are maintained for all closed meetings and only allowable subjects are discussed. The city has implemented several changes to ensure that closed session minutes are properly and accurately maintained. These changes have already improved compliance with the Sunshine Law requirements as noted in the Auditor's report. The city will ensure that all topics discussed in closed session will comply with the Sunshine Law, even if they are directly related and integral to permissible closed session discussions. Status - Implemented
4.2 Ensure all city business is conducted in compliance with the Sunshine Law, and meeting minutes are maintained. The city has implemented a change in practice and now keeps minutes and a record of votes for all Council work sessions. Status - Implemented
4.3 Ensure meeting notices are given for all Council meetings. The city will seek to make improvements in its process to ensure notices of all meetings are given timely. Status - In Progress

Implemented with ongoing review. Current and future meeting notices can be found
here. Citizens can sign up to receive text/email alerts of these meetings here.
5.1 The City Council and the JRC solicit proposals for professional services, enter into or update written contracts for professional services, ensure contracts contain provisions to adequately monitor services received, and require submission of adequately detailed invoices prior to payment. [T]he city will now issue cost and qualification based bids for professional services. The city also acknowledges that some contracts have not been updated in a timely manner. The city has begun the process of updating contracts and will continue to update contracts as bids can be let. The city will also explore developing and adopting a new policy governing procurement related to professional services and contracts. Additionally, the city will ensure contracts contain provisions to adequately monitor services received and require detailed invoices prior to payment.

The JRC is an Urban Redevelopment Corporation organized under Chapter 353 of the Revised Missouri Statutes. As such, they are not required to follow the same purchasing policies and guidelines as the city. [However] in order to ensure the JRC is obtaining the best value, the JRC will follow city procurement policies and will also issue cost and qualification based bids for professional services.
Status - In Progress
5.2 Ensure bids are solicited for all applicable purchases in accordance with city policy, maintain documentation of decisions made, and ensure bids are opened and evaluated prior to the signing of related contracts. The Council should also ensure all contracts are signed and include effective starting dates. The city will ensure purchasing policies are followed, in order to obtain the lowest and best bid. As required by State law, the city will issue proper RFP's, including cost and qualification based bids, for goods and services and proper RFQ's for architectural and engineering services. The City will comply with State law when procuring architectural and engineering services. Bids will be opened and reviewed prior to requesting Council approval on the award of contracts. The city will improve the retention of documentation concerning purchasing decisions. The city will implement processes to ensure contracts are signed and properly retained. Status - Partially Implemented
5.3 Comply with state law when procuring architectural and engineering services, including re-evaluating engineering services periodically and documenting the selection process. See response to 5.2 above.  
5.4 Monitor change orders, give consideration to bidding when substantial project changes are needed, and ensure change orders are adequately supported by documentation, approved, and work is not performed prior to approval of change orders or notices to proceed with work. The Council should enter into written contracts for services provided. The city will develop and adopt a change order policy, which addresses the issues outlined in this report. Status - Partially Implemented
5.5 Monitor the contract for compliance and reconsider the amount of funding provided to the chamber. The Finance Department should also ensure adequately detailed invoices are obtained and reviewed to support payments to the chamber. The Council has begun the process of reviewing the level of funding provided for this service. Additionally, the city is also working on developing a new contract with the Chamber, which will outline various expectations such as the documentation required to make payment to the Chamber. The updated contract will assist the Finance Department in ensuring proper documentation is obtained prior to making payment. Status - In Progress

Since the date of the follow-up, this recommendation has been implemented.
5.6 Ensure services are not incurred prior to approval of related contracts and cost overruns are approved and documented prior to incurring the services/costs. The City will ensure that contracts are approved, as well as any proposed cost overruns are approved and documented, before services are rendered.  
5.7 Enter into a written contract with the Library District. The city is currently utilizing a $25 million Economic Development Administration (EDA) grant to build a new Library at 20th and Connecticut. The city agrees that a formal contract will need to be adopted prior to the opening of the facility to outline the responsibilities of both parties. This agreement will include the provisions for the replacement of the lost personal property taxes, as well as the services the city shall provide to the Library and the costs associated with those services. Status - In Progress
6.1 Obtain feasibility studies of future city projects, as needed. The city will develop and adopt a policy that establishes procedures for evaluating such projects. Status - In Progress
6.2 Ensure current, formal appraisals are obtained before making significant real estate purchases. The city will adopt a policy outlining the use of current and formal appraisals prior to the purchase of any real estate. After the audit report was made public, staff produced an updated appraisal on the Crosslines property that was conducted in October of 2014. In the future, staff will continue to obtain current, formal appraisals on real estate purchases.
7.1 Establish policies regarding the use of manual checks; limit access to the signature plate, and check stock; and limit the number of individuals with signature authority on manual checks. The Council should also ensure the Finance Department accounts for the numerical sequence of checks issued and defaces and retains all voided checks. The city will develop a policy regarding manual checks and an accounting of the numerical sequence of checks issued, as well as defacing and retaining all voided checks.
          
[T]he city will further limit access to the signature plate and check stock.
Status - In Progress

The city has already removed the check signing ability from the person that performs the bank reconciliation.
7.2 Ensure purchase orders, including those for local store charge accounts, are prepared and approved in accordance with city policy. It is city policy for all departments to obtain an authorized purchase order prior to placing an order or picking up any items. Additionally, all vendors receive written notification that the city is not responsible for payment of such goods unless an authorized and valid purchase order has been issued first. The city will continue to strive to enforce this policy as written. Status - Partially Implemented
7.3 Periodically evaluate cell phone allowance amounts and the number of employees receiving allowances. Given the rapidly changing cell phone environment, the city concurs with the State Auditor's recommendation that the policy should be updated to include a periodic review of the documentation, as well as the number of employees receiving the allowances. The city will update this policy to reflect these recommendations.  
7.4 Ensure purchases are reasonable and prudent uses of public funds. The Council should also develop comprehensive policies regarding city food purchases that establish specific guidelines regarding what is proper and allowable along with documentation requirements. The meetings for which food is provided are normally after-hours' meetings for volunteer boards and the city believes it is appropriate to provide meals or snacks under certain circumstances. The city will develop and adopt a comprehensive policy regarding city food purchases and the documentation required.

City employees are a valuable asset to the community as they are the foundation providing the daily services to the residents and visitors of our city. Therefore, the Council feels it is important to recognize the employee's service and contributions to the community through the annual employee appreciation banquet and Christmas lunch. In the future, the city will ensure there is a business-related reason for all expenditures.
Status - Partially Implemented
7.5 Establish a policy to address the payment of employee memberships and professional licenses. Membership dues paid by the city are for employees that are required to have certain professional designations for their position. However, the city does not have a current policy regarding membership dues and subscriptions. The city concurs with the State Auditor's recommendation that a policy should be established. Therefore, the city will develop a policy regarding membership dues and subscriptions.  
7.6 Segregate payroll duties to the extent possible and implement appropriate reviews and monitoring procedures. The Finance Department does perform a supervisory review of the payroll functions. However, the process is not documented and we have not retained documentation of the review. The Finance Department will document the proper segregation of payroll duties and retain records of the review. Status - In Progress
7.7 Ensure federal awards are only used for allowable purposes. At the beginning of September 2014, the city received approval from the EDA to extend the grant deadline to October 31, 2014, and use the remaining funds for the disaster recovery coordinator position. EDA officials indicated the annual salary increase was an eligible reimbursable cost within the grant guidelines. The city will continue to ensure that federal awards are only used for allowable purposes.  
8.1 Allocate overhead costs to city funds based on specific criteria and retain documentation to support the allocations. The Finance Department will work to determine a verifiable, specific formula to use that strives to allocate accurate costs to each function. The Finance Department will also continue to periodically review the allocation. Status - In Progress
8.2 Ensure monies are used in compliance with state law. In 2004, the voters approved a one-fourth cent parks/stormwater sales tax with a specific list of projects to be completed with the tax proceeds. There were two stormwater projects on the voter approved list near the location of the high school prior to the tornado. One project was Indiana Avenue from 20th to 22nd Street at an original budgeted cost of $1,324,861 and the other project was Iowa Avenue from 20th to 24th Street at an original budgeted cost of $1,379,048. A disaster that destroyed the high school could not be anticipated when the voter approved project list was finalized. The school district is funded by public dollars, the same as the city. Given that the voters approved the stormwater improvements in this location and the school district requested assistance to complete the stormwater and street improvements, the Council believed utilizing these funding sources would benefit the taxpayers of Joplin.
          
The city will continue to use the special tax proceeds in the manner approved by the voters, as well as in compliance with state law.
Minutes for all board and commission meetings are being uploaded to our website, but are currently available by contacting the City Clerk's office. Links to those meeting minutes can be found here.

Specifically, minutes for our Sales Tax Oversight Committee, which monitors how the Parks and Stormwater Tax in question with this finding are being used, can be found here
.
9.1 Establish adequate records and procedures to effectively monitor vehicle, equipment, and fuel use, restrict access to the fueling center and public works facility, and periodically review access reports for propriety. The city will develop and adopt policies and procedures regarding the monitoring of vehicles, equipment, and fuel usage. Status - Partially Implemented
9.2 Review the necessity and cost effectiveness of allowing employees to take city vehicles home; establish adequate procedures for the justification, approval, and monitoring of take home vehicles; and ensure the city complies with IRS guidelines for reporting personal commuting mileage. The city currently does not have a take home vehicle policy. The city concurs with the State Auditor's recommendation that it needs to establish a policy regarding take home vehicles. The city will develop and adopt a take home vehicle policy. Status - Partially Implemented
9.3 Review the necessity of vehicle allowances and set the allowances to reasonably reflect the actual expenses incurred by the applicable employees. The city will review vehicle allowances. The city will either ensure the vehicle allowance matches actual mileage or the city will move to the IRS allowable mileage reimbursement for actual documented miles driven for city business.  
10.1 Ensure duties of receipting and transmitting/depositing monies are segregated or implement timely adequate supervisory reviews if duties cannot be appropriately segregated. The city will ensure the proper segregation of duties, when possible, in the payment collection policies and procedures. Additionally, appropriate supervisory reviews will be included.  
10.2 Account for the numerical sequence of receipt slip numbers, ensure monies are properly receipted and transmitted/deposited, and work with the city's software vendor to ensure dates batches are opened cannot be changed. The Council should ensure the Parks and Recreation Department follow the city's concessions inventory policy. In the payment collection policies and procedures, the city will ensure monies are properly receipted and deposited, along with a proper accounting of receipt numbers. The city believes the cash receipt dates in the electronic software system are sufficiently protected. The city will also follow the existing concession policy. Status - Partially Implemented
10.3 Ensure all documents associated with the receipt of monies are prenumbered and reconciled to monies received, recorded and deposited. Also, ensure manual or electronic logs of services provided are reconciled to monies received. In the payment collection policies and procedures, the city will ensure documents are prenumbered and reconciled to monies received, recorded and deposited, whether manual or electronic.  
10.4 Ensure a petty cash ledger documenting receipts, disbursements, and the balance of the petty cash fund is maintained for all petty cash funds. Establish written policies outlining the procedures for maintaining, using, and accounting for change funds. The city will develop a comprehensive petty cash and cash drawer policy that includes guidelines for maintaining, using, and accounting for petty cash and cash drawers.  
10.5 Ensure receipts are maintained in a secure location until deposited. [T]he city will ensure that all outside departments maintain collections in a secure place until the funds are deposited.  
11.2 Ensure penalties are assessed in accordance with city ordinance. The Council should also review past delinquent customer accounts and consider billing for the correct amount of penalties, if appropriate. Ensure an adequate review of delinquent sewer reports is performed and sewer service is shut off in accordance with city ordinance. Develop written policies for the write-off of uncollectible accounts. The city changed the sewer penalty ordinance after taking over the sewer billing and collecting. This penalty calculation by the computer system has already been corrected by the Finance Department to properly match the ordinance.

The city is aware of the sewer and trash balances being carried by many residents of Joplin. Since taking over the billing, the Finance Department has been making every effort to reduce these balances through the shut-off process. However, the city is limited by the sheer number of shut offs the private water company can perform.

The city will continue to implement needed new policies, such as a write-off policy, as well as continuing to alter existing policies to ensure this process is as efficient as possible.
Status - Partially Implemented
11.3 Establish a schedule of fees charged, including defining the types and amounts of costs included in the $500 administrative fee. The city will establish a detailed basis for the administrative fees related to demolitions. The city is currently conducting the bi-annual fee review. During this review, the administrative fee assessed for special tax bills will be included. Also, the city will develop and adopt formal policies and procedures regarding special tax bills, including any interest assessed. Status - Implemented

An ordinance was approved by the City Council in November 2015 reflecting a change to the fees charged for various services.
12.1 Closely monitor and take the necessary steps to fund the minimum reserve balance and improve the financial condition of the HSIF, and conduct periodic audits of claims as allowed by contract. The city agrees it is imperative to constantly monitor the Health Self Insurance Fund (HSIF). The effort undertaken by the city in regard to switching to partially self-insured health insurance is still in its infancy. The city has developed short-term goals and some long-term goals. However, the city has not developed comprehensive long-term goals for this effort. The city concurs with the State Auditor that comprehensive long-term goals for the HSIF need to be developed, especially given the changes created by the Affordable Care Act (ACA).
          
The city will work with our outside consultant to adopt a comprehensive long-term plan that outlines a method of achieving and maintaining the targeted reserve balance, as well as strives to address the future of the city's health insurance given requirements of the ACA. Additionally, the city will consider utilizing the option of periodic audits of the claims administrator.
Status - Partially Implemented
12.2 Closely monitor the ongoing financial condition of the Golf Course Fund and Airport Fund. Take the necessary steps to ensure timely collection of delinquent airport accounts and consider including contract provisions for late payment penalties and eviction procedures, and charging for parking at the airport. Ensure airport contracts are updated periodically and signed by both parties. The city Finance Committee, with the assistance of the Parks Department, the Finance Department, and the City Manager, recently reviewed the golf course finances and made recommendations to help improve the overall financial condition. Those recommendations included increasing fees and hiring a golf course professional. The Council adopted those recommendations and the changes were recently implemented. The city will continue to monitor the financial condition of the golf course and make appropriate changes as needed to try to recover its operating expenses.

As noted in the city's response to 11.1, the city will adopt accounts receivable policies and procedures, which will address the process for delinquent accounts. The Finance Department will work with the airport to include appropriate language in the contract provisions to assist with the collection of delinquent accounts. The airport will develop and adopt policies and procedures to ensure contracts are updated timely and all signatures are obtained.

While the city understands the financial condition of the Airport Fund, the city believes that free parking attracts people from outside the region to fly in and out of Joplin, rather than using other area regional airports such as Springfield, Tulsa, or Northwest Arkansas. The city further believes the benefit of free parking outweighs the revenue gain from charging for parking.
Status - In Progress
12.3 Accurately calculate the percent of annual general operating revenue from fines and court costs related to traffic violations as required by law. At 5 percent, the city is well below the 30 percent parameter of the State law when including both violations. The Finance Department will work with the municipal court to separate the collections of traffic violations from the collections of general ordinance violations in order to properly comply with the law. Status - In Progress
13. The City Council consider appointing an internal auditor or contracting with an independent audit firm to conduct audits of specific city operations and activities. The City respects the State Auditor's comments in this section. The city will consider the ability to implement this recommendation given the financial constraints of the city. If the city is unable to implement this recommendation as outlined by the State Auditor, the city will strive to achieve the same outcome by other means within the current city staffing levels or on a contract basis. Status - Not Implemented