State audit: City of Fairview misspent money, failed to take bids, awarded no-bid contracts to mayor's business

(From State Auditor Nicole Galloway)

A report released today by State Auditor Nicole Galloway on the City of Fairview identified numerous concerns in the Newton County community, including overpayments to the former city clerk and conflicts of interest by the former mayor. 

The review of city operations, which gave the lowest possible rating of "poor," was initiated through a petition signed by Fairview residents.

A comparison of the former city clerk's timecards and payroll checks written to her found more than $3,300 in overpayments from January 2020 to March 2021. In addition, the former city clerk issued payroll checks to herself weekly rather than bi-monthly, as required by city code, and also signed almost half of the payroll checks issued to herself.

The audit also found that the city improperly spent more than $120,000 of restricted funds from a city trust that could solely be used for the operation and maintenance of the John Q. Hammons Community Center. The Board of Aldermen spent $86,000 for the purchase of two local buildings and almost $34,000 for well pump repairs. A building purchase also exceeded the restriction of not spending more than $50,000 from the trust in one year.

The audit also identified conflicts of interest in the city's payment of $17,325 from January 1, 2019, to June 9, 2020, to a company owned and managed by the former mayor of Fairview. The Board of Aldermen did not solicit bids for the services provided by the former mayor's business, and he signed several of the checks issued to his business.

Concerns about the city's payroll controls and procedures also were identified in the audit. Those included timecards not being signed by employees or supervisors, and city code not being followed regarding compensation, vacation leave, and related employees. Accounting duties were not properly segregated or supervised, and city receipts were not also deposited intact or timely.

City officials did not always solicit bids or proposals as required by city code, and did not always enter into written contracts. The audit also found that supporting documentation for city credit card purchases was not retained. City personnel did not prepare proper reconciliations related to utility services, made adjustments to customer accounts without proper approval and documentation, and late penalties were not always charged and utility services not shut off in accordance with city ordinances.

The Board of Aldermen did not have adequate procedures to prepare or monitor city budgets, and city officials had not developed a formal annual maintenance play for city streets. In addition, city officials did not file an accurate financial report with the State Auditor's Office or publish semiannual financial statements for 2020, as required by state law.

The audit also noted that the city did not comply with the Sunshine Law for closed and open Board meetings, and that the city had not developed a records management and retention policy in compliance with state guidance. City officials also did not maintain records of all capital assets owned by the city.

A complete copy of the Fairview audit can be found here.