Auditor: Stoddard Co. board should have sought bids for construction

DEXTER -- Auditors called into question Tuesday for a second time a decision by a Stoddard County board to spend $2.57 million on building construction that was not put out for bid.

The matter was raised as Senate Bill 40 board members received audits for the 2015 and 2016 fiscal years. The matter was previously questioned by state auditors during a review of Stoddard County financials.

While construction of an office building and a work center/thrift store were completed outside the audit years, the matter is required to be included, said Pam Jean of Jean and Company accounting firm. It substantially changed the board's financial situation before the report was complete, she said. Construction projects were completed in 2017 and 2018.

Competitive bidding should be used for large projects, but the board does not have a policy in place regarding how to obtain bids for large projects, she said.

"Use of a competitive procurement process for major purchases ensures the Stoddard County sheltered facilities board has made every effort to receive the best and lowest price and all interested parties are given equal opportunity to participate in the business," Jean said, while reviewing state requirements.

The board has told auditors their attorney advised bidding rules did not apply to sheltered facilities boards. The state has said it does not agree with this interpretation, Jean said.

"The board responded in the (state) report that future projects will be kept in accordance with state law and adequate documentation of decisions will be kept," she said, later adding, "I understand that your lawyer felt as a facilities board, you should not, but prudent business practices for this project would have meant we would have had plans drawn up."

Contractors would have reviewed the plans and the lowest bid would have been accepted, she said. An independent architect or engineer would have participated in the process to determine if cost overruns were appropriate, Jean continued.

This provides safe guards in expenditures, she said.

"That's really what we're after here. You're spending tax dollars and it would be much improved if we did it that way," Jean said.

Other items noted during the presentation were a $99,000 building down payment in 2016 that was not a budgeted item. In future, budgets need to be amended before the end of the year, Jean said.

She also advised the board to make sure minutes are clear and concise, but also contain all essential information.

Minutes regarding lease contracts for the two buildings noted who would hold the lease, but none of the terms of the lease.

"I really think something that important should have been in the minutes," Jean said.

Targeted case management has a 30-year lease for $1,500 per month. The work center building is being leased to Progressive Industries for $1 per year for 30 years.

SB40 also needs to find a better system to track expenses and revenue for separate funds, she said. There should be a way to label accounts, as well as determine when an employee is working for multiple companies, and which company is being served, Jean told the board.

She reminded the board their responsibility to review and question financials is high with a small organization, when many duties are done by one person.

"If you have questions, you should raise them," she said.

SB40 had net assets at the end of 2016 of $2.19 million, according to audit documents.

It maintains three funds with the following balances at that time: general fund, $1.07 million; a special revenue fund for targeted case management, $447,900; and a capital investment/improvement fund, $473,300.

The board later approved a bid for $3,100 from the Cape Girardeau firm Stanley, Dirnberger, Hopper and Associates for the 2017 audit, citing delays in receiving the 2015 and 2016 audits. Two Poplar Bluff companies declined to bid on the project, and a Farmington company had a higher bid.