Auditor Galloway finds fiscal mismanagement, lack of oversight in city of Silex

City used restricted revenues to support routine city operations, audit finds questionable payments to former city administrator

State Auditor Nicole Galloway today released a citizen-requested audit of the City of Silex, which found the city is in poor financial condition and is using restricted utility funds to support the core functions of the city. The audit received an overall rating of poor.

"The city is facing a dire financial situation and city officials have not done enough to ensure the Board of Aldermen has a complete understanding of the city's finances," Auditor Galloway said. "Citizens deserve to know their tax dollars are being used efficiently and that the city can meet the needs of the community. My office will be back to ensure the changes promised by the new administration are made."    

The balance of the general fund declined in recent years. Costs related to delinquent payroll taxes, required repairs to the tornado siren, and losses incurred after the city's festivals, the spring tractor pull and fall festival, will further challenge the city's finances. The city has also been notified by the Department of Natural Resources that the water system is not in compliance and issues need to be addressed.   

The board uses restricted utility funds to supplement city operations. In 2018, transfers from the water and sewer funds totaled $140,000. The transfers were not properly supported, documented or approved by the board.

The board has not passed complete budgets in recent years and, as of September 2019, a budget for the year had not been prepared or passed by the board. Additionally, the board does not monitor the city's actual financial situation on a regular basis. As a result, the board was unaware spending exceeded budgeted amounts in 2018.

The audit also identified more than $6,000 in unsupported checks written to the former city administrator. No response was provided as to the purpose of the payments. The city also lacked adequate documentation for a variety of city purchases and city officials did not adequately review and approve invoices.

The audit recommended better oversight of the city's accounting processes. This includes better monitoring of bank accounts and payments, as well as ensuring money is properly tracked and deposited.          

A complete copy of the report is online here.