Of 26 recommendations made by Missouri Auditor Nicole Galloway’s office to the city of Winona following a “poor” rating issued last fall, 15 have been put in place by the city or are on their way there, according to a report released by Galloway this week.
The report, a follow-up review of government operations in the Shannon County city, examines progress made since the results of a September 2018 citizen-requested audit showed more than $42,000 was missing and unaccounted for over the course of at least two years.
“Although our initial review of the city of Winona was deeply concerning, the city has demonstrated a desire to restore public trust by implementing many of the corrective actions outlined in my report,” Auditor Galloway said. “I encourage officials to continue to improve their government processes and take steps to safeguard public tax dollars.”
The audit released in September 2018 found missing cash and checks that were recorded, but never deposited. In an effort to prevent detection, unrecorded check payments were substituted for missing cash, Galloway’s office reported.
During follow-up review, city officials indicated they continued to work with local law enforcement. The former city clerk, Terri Denton, was criminally charged in December 2018 with receiving stolen property, a felony.
Denton, whose employment with the city was terminated in September 2017 after 23 years, is set to appear for arraignment at 1 p.m. June 4 in Shannon County Court before Associate Circuit Judge Sandra West.
The follow up review found officials made significant improvements to oversight procedures for documenting cash, issuing receipt slips and depositing money. Ten recommendations made by auditors in Galloway’s office have been fully implemented by the city, the report shows.
Deposits and receipts are now being reviewed by at least one city employee who did not collect the money and prepare the deposits, as well as the mayor, the review shows. An annuity account opened in 2012 with Denton listed as the recipient, was closed in 2018.
In the initial audit report, Galloway said the balance of the annuity was more than $107,000 at the end of 2016. She reported Denton “incorrectly presented the annuity as a savings account on the city’s financial statements” and the board was unaware of its existence.
In addition, 15 bank accounts held by the city have been consolidated into four primary accounts, and once outstanding payments are cleared and direct deposit information has been updated, excess accounts will be closed, according to the report.
The original audit showed funds were not being spent appropriately; solid waste and utility department revenues were deposited in the general fund, for example, but disbursements for trash services were paid out of the solid waste fund.
The review shows steps are now being taken to ensure the funds are deposited into the right place and spent from the right account.
It was uncovered during the audit that the city of Winona was charging total sales tax in excess of the legal maximum allowed by the state by a half-cent. The total came from two separate voter-approved taxes: a general sales tax approved in 1975 used to fund trash services and a half-cent tax approved in 2016 for law enforcement.
In December 2018, the board of aldermen voted to repeal the most recent of the two taxes, Galloway reported. The repeal will take effect in December 2019. Based on a legal verbal opinion, the board placed a half-cent general purpose sales tax question on the April 2, which voters did not approve.
After implementing a review and reconciliation policy in the water department, the city discovered a 46 percent water loss in December 2018; by January, several leaks had been repaired and the water loss rate dropped to 29 percent, the report shows.
Galloway’s team learned during the initial audit that more than $4,800 had been paid to Denton and $2,400 to the city’s utility clerk in 2016, allegedly for their dual roles as court clerk and assistant court clerk, respectively. No documentation was provided to support the extra compensation, nor was it included on tax forms or clear how the duties were separate from their primary positions, Galloway reported.
The practice of paying additional compensation to the city and utility clerks has been ended, the review shows, and employees are compensated only for time worked and documented. However, amended W-2 forms have not been issued to show the extra compensation, the current city clerk told auditors.
A practice of compensating the city’s elected officials for $100 worth of utilities per month has also been ended, auditors said.
Progress has also been made related to budgeting and financial reporting, compliance with Sunshine law and keeping of city ordinances, computer security and Park Board finances.
However, auditors noted, the city struggles to achieve updates to Park Board bylaws and agreements with the city because only three people currently sit on the board, which requires seven members. The city has been unable to appoint new members due to a lack of interest.
No contingency plan or backup computer data testing has been implemented in case of disaster or other extraordinary situations, however, and data is not stored securely off-site, the review shows.