District F
Final Audit Resolution Summary
Region F, West Central Missouri Solid Waste Management District
Date of Final Audit Report: Jan. 26, 1999
For the Fiscal Years: 1992, 1993, 1994, 1995, 1996, 1997
Date of Final Resolution: March 2001
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 Recommendation: Inadequate
Match Documentation.
For fiscal years 1994-1997, the district could not support the one-third
match for the districts $20,000 annual administrative grants.
The district was using time and mileage of board members attendance
at board meetings as match contribution. Although board members
were required to sign in, no documentation of mileage or time spent
was maintained. The departments General Terms and Conditions
(GTC) II.D. states, "In kind (noncash) contributions are allowable
project costs when they directly benefit and are specifically identifiable
to the project or program." Also, II.D.(1) states, "Recipient
must invoice the department, as required by the particular agreement,
and provide financial records for total expenditures of state and
match or cost share funding." The auditor recommended that
the district obtain the supporting documentation to authenticate
the in-kind match for the administrative grants. If the proper supporting
documentation is not provided, then the district may be ineligible
to receive funding for five years.
District Response:
Region F reviewed the records for fiscal years 1994-1997 and documented
the match for district administrative grants for this time period.
A review of the meeting minutes and other records from fiscal years
1994-1997 showed that Region Fs district board members donated
33,896 miles (@ $.26/mile) and 2511 hours (@ $8.00/hour). Any miscellaneous
in-kind donations, such as phone calls, etc. were also included.
A spreadsheet with all donated hours and miles by fiscal year was
provided. In addition, the proposal to administer from the Prairie
Rose Resource Conservation and Development (RCD), Inc. to the Region
F Solid Waste Management District detailing in-kind match from the
RCD was provided. The yearly match was $12,438/year, figured at
1995 rates even though those costs were actually higher each succeeding
year. Each year the match was figured as part of the administrative
match. Since the required match is $6,800, the district felt that
the requirement had been met.
Final Resolution:
The department considers Finding 1 resolved. The district provided
to the departments Solid Waste Management Program (SWMP) on
October 5, 1999, copies of executive board member in-kind tracking
forms, a spread sheet for fiscal years 1994-1997 executive board
in-kind donations and a proposal to administer Region F district
to comply with GTC, II.D.1 and II.D. All documentation will be retained
in the districts permanent file.
2. Audit Finding and Recommendation: Reports
Lack Information for Evaluation District Grant.
It was noted that quarterly and final project reports for the
district grants did not contain any information on the volume of
waste disposal abatement as stated in 10 CSR 80-9.050(3)(B)(1)(A),
"The district shall submit to the department at the end of
each fiscal year quarter, a report which contains the following
for each project in progress. The details of progress, including
the volume of waste disposal abatement for each type of recovered
material utilized in the project." and (C) states, "The
district shall submit to the department a final report for each
project
that shall contain the same information as described
for quarterly reports
" The auditor recommended that the
district be required to submit future reports to the department
which contain evaluation information. The reports should note any
subgrantee which has not complied with the reporting requirements.
District Response:
The information supplied to Region F for the time period of fiscal
years 1994-1997 did not include the volumes of materials recycled
for those projects that this requirement applied to, and therefore,
couldnt be supplied at that time. However, all projects from
the time of the audit and in the future would contain those amounts
on the report. The information would be supplied to the district
grant manager with the quarterly reports.
Final Resolution:
The department considers Finding 2 resolved. The departments
SWMP does not elect to take further action for non-compliance on
this finding as the district indicated this situation would no longer
occur and SWMP believes the district understands and intends to
comply with this requirement. To date, quarterly status reports
submitted to the departments SWMP have provided complete information
as required by 10 CSR 80-9.050(3)(B)(1)(A). All documentation
will be retained in the districts permanent file.
3. Audit Finding and Recommendation: Composition
of the Executive Board.
Section I of the audit report states that the executive board is
comprised of 11 members. RSMo, Section 260.315.4.(2) states that
the council shall select seven persons to serve on the executive
board. The district believes that the regulations at RSMo, Section
260.315(1) provide for the districts to formulate an alternative
management structure pursuant to section 260.300. Region F further
states that the by-laws of the district were intended to demonstrate
that an alternative management structure had been formulated and
compliance to state regulations achieved. They cite the departments
Model Plan Guidelines for Comprehensive Solid Waste Management,
Chapter 3, under the heading Alternative Management Structure, "The
district can determine the number of members to serve on the executive
board, as well as their terms of office and the manner of selection
and replacement for the members." However, Region F does acknowledge
that they have not obtained from each local political subdivision
member a letter approving the Alternative Management Structure.
The auditor recommended that the by-laws, Alternative Management
Structure, and approval letter from each participating local political
subdivision member be submitted to the department to demonstrate
compliance with RSMo, Section 260.315.
District Response:
Region F complied with the requirements of establishing the district
when they were formed. A copy of the letter, dated August 30, 1991,
from G. Tracy Mehan, III, Director of the department at the time
was included with the districts response. In the letter, Mr.
Mehan officially notified the Region F of their formation and congratulated
them on this fact. Copies of the resolutions from the County Commissions
and Cities involved with the formation of the district were also
included with the attachment. In addition, a copy of the by-laws
of Region F was included which states the make-up of the executive
board as well as the district board. The district reviewed Section
260.300(3) RSMo, and felt it had met all the requirements of the
law. Therefore, the district felt that there was no need to reformulate
the executive or district board and that to do so would be a waste
of time for Region F, the department, County Commissioners, and
everyone else involved. The district instituted a tracking system
to ensure that all voting members were seated. This was done at
the time of the audit and the auditor was made aware of this fact.
Final Resolution:
The department considers Finding 3 resolved. The district provided
to the departments SWMP on October 5, 1999, a copy of an August
30, 1991, letter signed by the department director identifying the
district as officially formed as required by Section 260.300(3)
RSMo. Also, the district submitted resolutions indicating the district
was administering the district as an alternative management structure
and provided copies of the resolutions to the departments
SWMP on February 9, 2001. All documentation will be retained in
the districts permanent file.
4. Audit Finding and Recommendation: MBE/WBE
Utilization.
The districts current practices do not include a formal policy
to encourage utilization of minority, women, and small disadvantaged
businesses when procuring goods and services. Additionally, the
department has no record of the district submitting Form 334, "MBE/WBE
Utilization Report." The departments GTC, II.W. and RSMo,
Section 260.320.4 requires the district to establish policies which
encourage the utilization of such disadvantaged enterprises. The
auditor recommended the districts procurement policies be
amended to include the GTC provisions relating to the encouragement
of utilizing disadvantaged enterprises. Appropriate documentation
should be maintained in the file supporting submission of Form 334
"MBE/WBE Utilization Report" to the department.
District Response:
Region F regarded the utilization of minority, women and small,
disadvantaged businesses when procuring goods and services as very
important. However, the district never used the Standard form 334
for two reasons: 1) the district didnt know that it existed
and was never given guidance from the department as to its use and,
2) the form was fully titled "MBE/WBE Utilization under Federal
Grants, Cooperative Agreements and other Federal Financial Assistance."
Therefore, it was not valid for use when reporting on district grants,
which were funded with tipping fees, collected at landfills.
A look at the form gave a vivid eye opener to anyone interested in districts submitting this report to the district grant manager as required under Audit Finding Resolution Summary, Item 4. For example, box 2 asked for the Federal Financial Assistance Agency. For any district projects this would be "NOT APPLICABLE". Line 4a asked for the (Federal) Financial Assistance Agreement ID Number. This was "NOT APPLICABLE." Line 4b asked for the Federal Financial Assistance Program. This was "NOT APPLICABLE." Line 4c asks for the Type of Federal Assistance Agreement. This was "NOT APPLICABLE."
In addition, the instructions for Form 334 stated that "MBE/WBE utilization is based on Executive Orders 11625, 12138, 12432 and OMB Circular a-102. Standard Form 334 must be completed by recipients of Federal grants, cooperative agreements, or other Federal financial assistance valued at $500,000 or more and which involved procurement of supplies, equipment, construction, or services to accomplish Federal assistance programs." This requirement may apply to the department since it received Federal funds, but did not apply to solid waste districts which received district grant dollars from the State of Missouri, generated from fees collected at landfills.
If the departments SWMP insisted that Region F submit this meaningless report which would be a waste of resources, time and effort, it would do so. However, it must be pointed out that this goes against what the solid waste districts are trying to accomplish for reducing waste and preserving our natural resources.
Final Resolution:
The department considers Finding 4 resolved. The district provided
to the departments SWMP on April 27, 2000, a copy of a district
policy complying with GTC, II. W. which included an executive board
approval statement. All documentation will be retained in the districts
permanent file.
5. Audit Finding and Recommendation: Conflict
of Interest.
The district has an informal policy regarding conflict of interest.
During our review of areas where the potential for conflict of interest
could surface, we determined that the informal procedures as described
to us were in place. However, due to the sensitivity of this area,
a formal policy should be developed to ensure compliance with department
GTC II.Q. GTC, II.Q. does not allow performance or participation
in any decision which would affect their personal or pecuniary interest,
directly or indirectly. The auditor recommended that the district
develop a formal conflict of interest policy setting out guidelines
to council and executive board members and grant evaluators.
District Response:
Region F felt that the recommendation to adopt a policy on conflict
of interest was an important issue to be addressed and thanked the
departments SWMP for making such recommendation. There wasnt
a quorum at the last meeting of the district and such policy wasnt
adopted at that time but would be at the next scheduled meeting
of the district which was October 21, 1999. The policy would be
presented to the board at that meeting for their consideration.
As soon as the policy was adopted by the district, a copy of the
policy as well as minutes of the meeting would be given to the district
grant manager.
Final Resolution:
The department considers Finding 5 resolved. The district provided
to the departments SWMP on April 5, 2000, a copy of a district
policy complying with GTC, II. Q. which included an executive board
approval statement. All documentation will be retained in the districts
permanent file.
6. Audit Finding and Recommendation: Interest
Income Not Reported
Interest income was earned by the district in their checking
account. 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 $10,478. The
departments GTC II.C. states, "Program income shall be
deducted from outlays which may be both federal and nonfederal,
unless the department, 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 for fiscal years 1992-1997 ($10,478)
or that the district obtain permission from the program to use this
interest income for administration of the program.
District Response:
Region F sent a letter to Mr. Jim Hull requesting permission from
the departments SWMP to use the interest income for administration
of the districts operation in order to comply with GTC, II.C.
The district purchased an accounting system that would track all
funds and account for all monies in each fund, including any interest
income. A copy of the permission request letter and evidence of
the implemented tracking system would be provided to the district
grant manager as requested.
Final Resolution:
The department considers Finding 6 resolved. The district provided
to the departments SWMP on April 5, 2000, a copy of a December
13, 1999, letter from SWMP to all 20 districts giving permission
to use and instructions as to how to use accrued interest income
to comply with GTC, II.C. All documentation will be retained in
the districts permanent file.
7. Audit Finding and Recommendation: Unprotected
Cash Balance
Cash balances averaged over $100,000 for the period under audit.
The FDIC only insures funds up to $100,000 leaving the remaining
balance as a potential loss to the district. The departments
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 that the
district request that the bank pledge collateral on its collective
cash balance in excess of $100,000.
District Response:
When this item was brought up during the audit, the district contacted
the bank and obtained the pledged collateral to comply with GTC,
II.E.3. This item was completed before the auditor left the office.
A copy of the pledged collateral was provided to the district grant
manager.
Final Resolution:
The department considers Finding 7 resolved. The district provided
to the departments SWMP on April 5, 2000, documentation of
pledged collateral from the State Bank of Missouri to comply with
GTC, II.E.3. All documentation will be retained in the districts
permanent file.
8. Audit Finding and Recommendation: Comingling
of Funds.
The district deposits all funds into one interest bearing account
and pays all district and project grant costs out of this account.
However, reimbursement of administrative costs are transferred to
a non-interest bearing account on an as-needed basis. All interest
is placed with administrative funds. Because of these procedures,
it is not possible to determine the amount of interest earned on
district grant funds or the administrative grant funds. The departments
GTC II.C. states, "When anticipated and authorized, program
income is added to the funds committed to the agreement it must
be credited back to the original fund or project from which it was
earned." The auditor recommended that the district adopt a
fund accounting system to track the separate funds, or open a separate
interest bearing account for administrative grants.
District Response:
The district adopted a fund accounting system to track the separate
funds and felt that this would serve to adequately address this
item in the audit findings report. However, if the departments
SWMP felt that the district should open a separate interest bearing
account for administrative funds, it would be done. Copies of any
documentation would be given to the district grant manager as requested.
Final Resolution:
The department considers Finding 8 resolved. The district provided
to the departments SWMP on April 5, 2000, a copy of December
16, 1999, executive board meeting minutes in which the board discussed
and approved separate accounts to comply with GTC, II, C. All documentation
will be retained in the districts permanent file.
9. Audit Finding and Recommendation: Subgrants
Not On Reimbursement Basis.
The districts policy is to pay subgrantees upon their submitting
an invoice (prepared by the subgrantee) to the district, and the
districts receiving funds from the department. However, this
procedure is not in place for district projects 94131 ($10,400),
94132 ($7,000), and 96122 ($5,400) which were awarded to the Prairie
Rose Resource Conservation and Development to support administrative
costs for present and future district grant cycles. Due to the comingling
of administrative costs, it is not possible to determine whether
unexpected project costs exist, if at all, at June 30, 1997, for
any one of the district projects 94131, 94132 and 96122. In total,
the reported administrative costs exceeded the three district project
grant administrative budgets. The departments GTC II.A. states,
"The recipient will be reimbursed for all allowable expenses
incurred in performing the scope of services. The recipient shall
report project expenses and submit standard invoices, attached to
the agreement, for payment." The auditor recommended that the
district should be required to implement the practice that all district
grants be on a reimbursement basis for all costs in the future.
Additionally, subsidiary records should be prepared that detail
unexpended cash balances for all projects.
District Response:
The only projects that this item applied to were the district grants
that were awarded to the Region F Solid Waste Management District
for administering the district grants in fiscal years 1994, 1996
and 1997. As suggested to the district, it provided invoices to
itself in order to "pay" itself and satisfy the requirements
of the audit findings. Copies of these invoices will be provided
to the district grant manager in this report.
Final Resolution:
The department considers Finding 9 resolved. The district provided
to the departments SWMP on October 5, 1999, copies of invoices
covering district reimbursement to itself to comply with GTC, II.A.
All documentation will be retained in the districts permanent
file.
