District H

Audit Finding Resolution Summary
Region H, Mid-Missouri Solid Waste Management District
Date of Final Audit Report: Oct. 19, 1998
For The Fiscal Years: 1992 -1997
Date of Final Resolution: Feb. 2, 2000

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 Year 1995, the district could not support the one-third match for the districts $20,000 administrative grant. The Department of Natural Resources’ (DNR) General Terms and Conditions (GTC) II.D. states, "In kind (non cash) contributions are allowable project costs when they directly benefit and are specifically identifiable to the project or program." Also, II.D.(1) state, "Recipient must invoice the DNR, as required by the particular agreement, and provide financial records for total expenditures of state and match or cost share funding." GTC, II.D.2. states, "failure to provide 100 percent of the match or cost share ratio of total expenditures as identified on the agreement signature form may cause that recipient to become ineligible to receive additional financial assistance from the DNR for a period of five years."

The auditor recommended the district obtain the supporting documentation to authenticate the in-kind match for the administrative grant. If the proper supporting documentation is not provided, then the district may be ineligible to receive funding for five years.

District Response:
Supporting documentation to authenticate the in-kind match for the Fiscal Year 1995 District Administrative Grant was provided on Dec. 22, 1999.

Final Resolution:
The DNR considers Finding 1 resolved. The City of Columbia’s fiscal officer provided to the Solid Waste Management Program (SWMP) on Dec. 22, 1999, documentation outlining the in-kind match of the district planner as requested. All documentation will be retained in the district’s permanent file.

2. Audit Finding and Recommendation:
Reports Not Timely Filed – District Grant.  Quarterly and final project reports for the district grants were not submitted to DNR on a timely basis or at all for several district grants. 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."

CSR 80-9.050(3)(B) states that "The district shall submit to the department at the end of each fiscal year quarter, a report…" The auditor recommended that the district be required to submit future reports to the DNR within the time limit allowed by law. The reports should note any subgrantee which has not complied with the reporting requirements.

District Response:
The district is of the opinion that this finding is resolved.

Final Resolution:
The DNR considers Finding 2 resolved. The district has complied with the auditor’s recommendation and has provided the district grant manager with delinquent and current quarterly status reports. The district has indicated that the reports are electronically generated now which will enable the district to provide timely submissions to the district grant manager. It is the policy of the SWMP to withhold reimbursements until outstanding quarterly status reports are provided. All documentation is a part of the district’s permanent file.

3. Audit Finding and Recommendation:
Financial Assistance Agreement (FAA) Signed Late – District Grant 95002. The auditor noted that District Grant 95002 was awarded on June 1, 1995, but the Mid-Missouri Solid Waste Management District (SWMD) had failed to enter into a FAA as of that date. It was determined that the Executive Board read the FAA on June 19, 1995, and approved the agreement on July 3, 1995, both dates being after the effective date of the agreement. 10 CSR 80-9.050(5)(B)2.B. states that before awarded funds are distributed to an applicant, the recipient shall enter into a FAA issued by the district which is consistent with the departments terms and conditions. The auditor recommended that the district be required to execute FAA before funds are awarded to applicants.

District Response:
"The Mid-Missouri SWMD would like to submit for the record a copy of the Fiscal Year 1995 District Grant Agreement between the department and the district (A, B). This agreement was signed by the DNR’s Director, on March 24, 1995, making that date the effective date of the agreement. The Chair of the Mid-Missouri SWMD Executive Board, signed on May 29, 1995. Both signatures were in advance of the effective date of District Grant 95002, June 1, 1995. There is nothing to support the auditor’s statement, ‘We determined that the Executive Board read the Financial Assistance Agreement on June 19, 1995, and approved the agreement on July 3, 1995, both dates being after the effective date of the agreement.’"

Final Resolution:
The DNR considers Finding 3 resolved. The district provided documentation to the SWMP on March 23, 1999, that indicated the Fiscal Year 1995 FAA was signed before the June 1, 1995, effective date which was indicated on the FAA between the district and its subgrantee. 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.

4. Audit Finding and Recommendation:
Fifteen Percent Retainage Paid Before Final Report – District Grant 93055. Mid-Missouri SWMD disbursed the final payment, including the 15 percent retention, under District Grant 93055 before the final report on project expenditures was received. The date of the final report was Oct. 16, 1994, or 30 days after the date of final payment, Sept. 16, 1994. 10 CSR 80-9.050(4)(c) states that "The Executive Board shall retain 15 percent of the funds from the recipient until the board gives approval to the recipients final report and the final accounting of project expenditures." The auditor recommended the district is required to retain 15 percent of subgrant funds until approval of the final report and accounting of project expenditures and must adhere to these regulations.

District Response:
The district is of the opinion that this finding is resolved.

Final Resolution:
The DNR considers Finding 4 resolved. The district stated that it is likely the Fiscal Year 1993 Executive Board was unaware of the 15 percent retainage requirement of 10 CSR 80-9.050(4)(c), but that the current administration is, and is committed to complying with this requirement. The SWMP does not elect to take further action for non-compliance on this finding as this situation is no longer occurring and the SWMP believes the district understands and intends to comply with this requirement.

5. Audit Finding and Recommendation:
Composition of the Executive Board. The district’s Executive Board is comprised of nine members. RSMo, Section 260.315.4.(2) states that the council shall select seven person 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. Mid-Missouri SWMD 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 DNR’s 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, Mid-Missouri 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 DNR to demonstrate compliance with RSMo, Section 260.315.

District Response:
"For an alternative management structure to form it is only required that the alternative be ‘agreed to by each county in the district,’ RSMo, 260.300(3). This is clearly the case in formation of the Mid-Missouri SWMD. Development of the district’s by-laws had the full participation of its members. It was the stated and written intention of the newly formed district to use the by-laws as the vehicle by which an alternative management structure would be formed. Evidence of this has been provided. By virtue of the by-laws, the agreement is a ‘joint powers agreement made and entered into by, between, and among the following political subdivisions, hereinafter referred to as Members or Member.’ This is clearly a statement of the member’s mutual and unanimous support for the by-laws. The validity of the by-laws is not in dispute among district members. As per the district’s by-laws, amendments to this structure are approved by majority vote of the participating members of the district’s Executive Board and council. The last amendment to the by-laws was approved June 21, 1995. A copy of the by-laws, the pertinent portions of the minutes from the June 21, 1995, Executive Board Meeting, and the June 21, 1995, Council Meeting are provided for your records (A,C).

"The department’s request that the district ‘create resolutions, revise by-laws and obtain approval letters from each county involved…’ is not supported by the solid waste law. There is no mention of a letter from each county, or a separate resolution from each county, in the Solid Waste Management Law, or in the guidance supplied to the districts at the time of formation."

"The district can not find a reference in the law, rules, terms and conditions, or the department’s district formation guidance, to support this finding. The district’s formation is consistent with the intent of the Senate Bill 530. It is the opinion of the Mid-Missouri SWMD that this finding should not have been included in the audit findings. The Mid-Missouri SWMD considers this finding resolved."

Final Resolution:
The DNR considers Finding 5 resolved. The district provided documentation to the SWMP on March 23, 1999, that indicates the district met on Jan. 8, 1992, for an Executive Board meeting and decided their formal formation as a district by electing to use an alternate management structure. All documentation will be retained in the district’s permanent file.

Audit Finding and Recommendation:
Budget and Scope of Work Revisions. It is the policy of the district to discuss with subgrantees proposed budget and scope of work revisions and then obtain board approval. The district then discussed project revisions on the next quarterly report submitted to the DNR. A cost revision that was negotiated with subgrantees was submitted to the DNR as part of the district’s request for re-budgeting carryover funds to the subsequent year and obtained DNR’s approval of such. Accordingly, the auditor took no exception to this practice; however, it may have been by coincidence that the DNR’s approval of reallocation of carryover funds included advance approval of subcontract revisions providing compliance to DNR’s Terms and Conditions.

The DNR’s GTC, II.G. Budget and Scope of Work Revisions requires prior approval from the DNR for approved changes in the scope of work or budget that must be incorporated in the subgrantee’s written amendment. Failure to obtain advance approval from DNR on subgrantee budget and scope of work revision could yield significant cost dis-allowances on subcontracts. The auditor recommended the district incorporate into their procedures compliance with GTC, II.G. requiring advance approval from the DNR for subgrantee budget and/or scope of work changes.

District Response: 
"There is no need for the district to develop or otherwise state an official procedure regarding the process for approval of amendments to subgrant FAA. The district considers the GTCs to be of sufficient weight to constitute official procedure. It is the policy of the district to maintain full compliance with the GTC. The district will comply with the GTC, II.G, as written, when handling all future amendments. The district considers this finding resolved."

Final Resolution:
The DNR considers Finding 6 resolved. The SWMP recently revised the Special Terms and Conditions, 11. to require that any district implementing a budget and/or scope of work change may do so without obtaining prior written approval from the department. However, the district must notify the department of the proposed change and provide a copy of the amended FAA between the district and its subgrantee as well as Executive Board meeting minutes in which the amendment was discussed and approved. 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.

7. Audit Finding and Recommendation:
MBE/WBE Utilization.  The district’s current practices do not include a formal policy to encourage utilization of minority, women, and small disadvantaged businesses when procuring goods and services. Additionally, DNR has no record of the district submitting Form 334, "MBE/WBE Utilization Report." The DNR’s 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 district’s 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 DNR.

District Response: 
"The district audit does reference DNR’s GTC, II.W. The auditor recommends that ‘procurement policies be amended to include the GTC provisions relating to the encouragement of utilizing disadvantaged enterprises.’ This will be done as an amendment to the by-laws in Article IX, Executive Board Powers, Item K. Submission of Form 334, ‘MBE/WBE Utilization Report’ will be filed quarterly with SWMP."

Final Resolution: 
The DNR considers Finding 7 resolved. The district provided draft documentation to the SWMP on Dec. 22, 1999, that will be added to its District Grant Application and Guidance Document to comply with GTC, II.W as recommended. A copy of the Executive Board meeting minutes approving this addition was provided on Feb. 2, 2000. Form 334 will be provided with Quarterly Status Reports. All documentation will be retained in the district’s permanent file.

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 the DNR’s 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: 
"The district does have a formal policy regarding conflict of interest. It was provided to the auditor, and was provided to the SWMP (By-Laws of the Mid-Missouri Solid Waste Management District, Article V, Council, Item B., and Article IX, Executive Board Powers, Item L). The district considers this finding resolved."

Final Resolution: 
The DNR considers Finding 8 resolved. The district provided draft documentation to the SWMP on Dec. 22, 1999, that will be added to its District Grant Application and Guidance Document to comply with GTC, II.Q. as recommended. A copy of the Executive Board meeting approving this addition will also be provided upon its approval. All documentation will be retained in the district’s permanent file.

Audit Finding and Recommendation:
Recycled Paper. The district is using 25 percent rather than the required 50 percent recycled paper content. The DNR’s GTC, II.V. requires 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 other than DNR. The auditor recommended the district obtain DNR’s consideration and/or waiver of the 50 percent rule and establish procedures to ensure the use of the chasing arrows on at least one page of materials distributed to outside parties.

District Response: 
"The district has always exceeded the required amount of post-consumer recycled content in it’s paper purchasing. The district will comply with GTC, II.V as written. We are providing a document as proof of compliance with the recycled content requirement. The first page of this document contains the chasing arrows recycled content symbol, as required. This practice will be maintained on all future correspondence, and all published material. The district considers this finding resolved."

Final Resolution:
The SWMP considers Finding 9 resolved. The district provided documentation on March 23, 1999 indicating its use of the proper percentage of consumer content paper with the chasing arrows symbol as required in GTC, II.V. All documentation will be retained in the district’s permanent file.

NOTE: Due to a revision to federal requirements, 50 percent recycled paper content is no longer required: Executive Order 13101, September 14, 1998, effective Dec. 31, 1998, indicates that no less than 30 percent post-consumer content is required by 505(a) of the Executive Order unless this is not available, does not meet reasonable performance requirements or is unreasonable in cost. At least one page of any material distributed to outside parties should display the chasing arrows sign to comply with GTC, II.V.