Susan Montee, CPA

Susan Montee, CPA

Missouri State Auditor

Village of Phillipsburg

March 2008

Report No. 2008-19

auditor.

Office of

Missouri State Auditor

Susan Montee, CPA

March 2008

The following findings were included in our audit report on the Village of Phillipsburg,

Missouri.

---------------------------------------------------------------------------------------------------------The Village of Phillipsburg operates a sewer system that provides service to

approximately 100 customers with sewer system operating revenues in excess of $30,000

annually. Many significant problems were identified in the control procedures related to

the sewer system. The village does not perform adequate monthly reconciliations of total

amounts billed, payments received, and amounts unpaid. Ledger cards for each customer

were maintained in an unorganized manner. An independent approval of adjustments

made to customer accounts is not always performed, controls over sewer deposits are in

need of improvement, and there is not adequate segregation of duties related to the

village's sewer system. The village also has not performed a formal review of the sewer

rates for several years.

The village's budgets were not complete, and actual expenditures exceeded budgeted

expenditures for the General Fund and the Sewer Operating Fund for the year ended

December 31, 2006. In addition, the budgets for the years ended December 31, 2007 and

December 31, 2006 were not approved until July 23, 2007 and March 21, 2006,

respectively. The village's published semi-annual financial statements for the six months

ended June 30, 2007 were incomplete and the annual financial report to the State

Auditor's Office for 2006 did not contain all required information.

The village does not have a formal bidding policy. During the year ended December 31,

2006, bids were either not solicited or bid documentation was not retained in some

instances. In addition, the village did not always enter into written contracts defining

services to be provided and benefits to be received. Further, vendor invoices or other

supporting documentation were not retained for some village expenditures.

Improvement is needed in the handling of closed meetings. Also, minutes from both open

and closed meetings did not always include sufficient detail of matters discussed.

Also, included in the audit report are recommendations related to accounting controls and

procedures, untimely audits, restricted revenues, and capital assets.

All reports are available on our Web site: auditor.

VILLAGE OF PHILLIPSBURG

TABLE OF CONTENTS

Page

STATE AUDITOR'S REPORT................................................................................................... 1-3

MANAGEMENT ADVISORY REPORT - STATE AUDITOR'S FINDINGS ....................... 4-19

Number

1.

2.

3.

4.

5.

6.

7.

8.

Description

Sewer System Controls and Procedures ......................................................5

Budgets, Financial Statements, and Planning..............................................7

Expenditures, Written Agreements, and Collateral Securities ..................10

Board Meetings and Records .....................................................................13

Accounting Controls and Procedures ........................................................15

Untimely Audits.........................................................................................17

Restricted Revenues...................................................................................17

Capital Assets ............................................................................................19

HISTORY, ORGANIZATION, AND STATISTICAL INFORMATION .............................. 20-24

-i-

STATE AUDITOR'S REPORT

-1-

SUSAN MONTEE, CPA

Missouri State Auditor

To the Honorable Chairperson

and

Members of the Board of Trustees

Village of Phillipsburg, Missouri

The State Auditor was petitioned under Section 29.230, RSMo, to audit the Village of

Phillipsburg. The scope of our audit included, but was not necessarily limited to, the years ended

December 31, 2007 and 2006. The objectives of our audit were to:

1.

Obtain an understanding of the petitioners' concerns and perform various

procedures to determine their validity and significance.

2.

Determine if the village has adequate internal controls over significant

management and financial functions.

3.

Determine if the village has complied with certain legal provisions.

Our methodology included reviewing minutes of meetings, written policies and

procedures, financial records, and other pertinent documents; interviewing various personnel of

the village, as well as certain external parties; and testing selected transactions.

We obtained an understanding of internal controls that are significant within the context

of the audit objectives and assessed whether such controls have been properly designed and

placed in operation. However, providing an opinion on the effectiveness of internal controls was

not an objective of our audit and accordingly, we do not express such an opinion.

We obtained an understanding of legal provisions that are significant within the context

of the audit objectives, and we assessed the risk that illegal acts, including fraud, and violations

of contract, grant agreement, or other legal provisions could occur. Based on that risk

assessment, we designed and performed procedures to provide reasonable assurance of detecting

instances of noncompliance significant to those provisions. However, providing an opinion on

compliance with those provisions was not an objective of our audit and accordingly, we do not

express such an opinion. Abuse, which refers to behavior that is deficient or improper when

-2P.O. Box 869 ? Jefferson City, MO 65102 ? (573) 751-4213 ? FAX (573) 751-7984

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