Follow-up on poor Fairview state audit shows much more work to be done

(From State Auditor Scott Fitzpatrick)

A report released today by Missouri State Auditor Scott Fitzpatrick details how the City of Fairview has worked to address two of the most significant findings from an audit released in 2022, but failed to implement most of the recommendations from the original report. The 2022 report gave the city a rating of "poor" and was initiated by a petition signed by Fairview residents.

"It’s encouraging to see city officials have worked to address some of the most serious issues identified in the previous audit report, but it's clear there is much more work to be done to make the City of Fairview a government entity that is truly transparent and accountable. I urge the Board to continue working in good faith to put our recommendations into place as quickly as possible," said Auditor Fitzpatrick.

The follow-up report looks at 22 of the recommendations made in the original audit and finds the city has implemented only 3 of them. Of the remaining 19 recommendations, the city has partially implemented 4 of them, and 2 more are in progress, but it has failed to implement the other 13.

The 2022 audit of the City of Fairview uncovered how the former city clerk received more than $3,300 in overpayments from January 2020 through March 2021, and the follow-up details how the Board of Aldermen is currently working with the Newton County Sheriff's Office regarding possible criminal prosecution of the overpayments. The original audit also found 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 follow-up shows the Board is now reviewing invoices for all disbursements from the Trust to make sure they are reasonable and in accordance with the Trust requirements.

Additionally, the original audit 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 former mayor signed several of the checks issued to his business, and the Board of Aldermen did not solicit bids for the services provided by his business. The follow-up report shows the city has implemented a policy to require two independent signatures on all checks, but has failed to retain documentation showing bids were advertised as required by city code. The city has also continued to fail to enter into written contracts for services.

The follow-up report finds continued concerns about the city's payroll controls and procedures. The original audit identified timecards not being signed by employees or supervisors, and city code not being followed regarding compensation, vacation leave, and related employees. The city has not implemented the recommendations from the original audit to address these issues. Additionally, the city has not implemented recommendations to ensure accounting duties are properly segregated or supervised, and city receipts are deposited intact or timely.

The 2022 audit also found supporting documentation for city credit card purchases was not retained, and the follow-up shows the city has at least partially implemented a recommendation to retain supporting documentation. However, the Board does not review or adjust credit card limits, and does not receive a detailed listing of city disbursements or supporting documentation. As a result, the Board is unable to ensure all disbursements are necessary and represent a prudent use of public funds.

The original audit found 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 follow-up report finds these problems persist.

The follow-up report also notes how the Board of Aldermen did not have adequate procedures to prepare or monitor city budgets. 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 follow-up report shows the city has not implemented recommendations to address these issues, and failed to file a financial report for 2022.

Finally, the follow-up report shows the Board of Aldermen has successfully implemented the recommendation to ensure meetings are held at a place and in a manner to accommodate and allow the public access to the meetings, proper notification and agendas for public meetings are given, and the reasons for holding emergency meetings are documented. However, the city again violated the Sunshine Law by closing a November 14, 2023, Board meeting without specifying the reason for the closed meeting.

The original audit of the City of Fairview can be found here. The follow-up report is available here.