10/08/2024 - Jefferson City, MO
A new report released today by Missouri State Auditor Scott Fitzpatrick details
the Village of Leslie's struggles to perform essential duties such as preparing
annual budgets and filing adequate financial reports, and failure to provide
sufficient oversight for the city sewer system. The audit, which was requested
by the citizens of the Village of Leslie, gives the municipality a rating of "Poor."
"As our audit shows, the Village of Leslie has failed to perform
some of the most essential duties that are necessary for a municipality to be
managed effectively, efficiently, and transparently. Our report gives the Board
of Trustees actionable steps that can be taken to put the village on a better
path to ensure their decisions are in the best interests of taxpayers,"
said Auditor Fitzpatrick. "I'm encouraged by the cooperation we have seen
from the Board members to date, and urge them to continue working to put all of
our recommendations into place."
The audit
describes how the village's Board of Trustees does not actively monitor or manage
sewer accounts and fails to obtain sufficient financial reports from the contracted
accounting firm performing accounting functions for the sewer system. Because
of this lack of oversight, the Board is not monitoring sewer billings and
accounts receivable, and can't be certain all money receipted by the accounting
firm is handled properly and deposited into the village sewer account. The
audit found the Board has not attempted to collect payments for 2 accounts with
outstanding balances totaling $7,097 and $1,788 respectively. The Board also
failed to stop billings for 4 accounts to which the village was no longer
providing service. The Board is unaware when property owners change and the
accounting firm's practice is to transfer the old owner's outstanding accounts
receivable balance. The audit recommends the Board establish policies to
monitor and manage the village's sewer accounts, including how to handle new
owners, obtain financial reports and bank statements from the accounting firm
hired to maintain the village sewer accounts, and to review the information to
determine actions needed.
Additionally,
the report explains how the Board has not developed a formal maintenance plan
for the sewer system. The absence of routine, village-wide maintenance has left
the village with minimal knowledge of the state of its sewer system, repair
prioritization needs, and potential financial impacts. The Board has also
violated state law by failing to obtain annual audits of its sewer system and
has failed to perform a recent formal review, such as a cost study,
of its sewer rates. Without current cost studies, it is unclear whether the
rates assessed are set at an appropriate level.
The audit report also details how the
Board failed to complete the village's 2023 property tax rate certification
process. As a result, the Franklin County Clerk set the village's 2023 tax rate
levy at zero. The village only received $839 in property tax revenues for the
year ended March 31, 2024, compared to $6,843 received for the year ended March
31, 2023. Without having a property tax levy the village lost approximately
$6,000 in property tax revenue.
The audit notes how the Village of Leslie has not prepared annual
budgets for the years ended March 31, 2024, 2023, 2022, and 2021. The members
of the village's Board of Trustees indicated they were not aware a budget
needed to be prepared annually. As the report points out, a complete
and well-planned budget is statutorily required and can serve as a useful
management tool by establishing specific financial expectations for each area
of village operations. The village also violated state law by failing to file
adequate annual financial reports with the State Auditor's Office for the years
ended March 31, 2023, 2022, 2021, and 2020, and failed to comply with state law
by not publishing or posting semiannual financial statements as required by
state law. The village did not timely file its financial reports for the years
ended March 31, 2021, and 2020. Section
105.145.9, RSMo, requires political subdivisions to be fined $500 per day for
missing filing deadlines, and as a result of the village's failure to timely
file financial reports it owes $362,500 in fines, which stopped accruing on
December 14, 2022, when the village filed its fiscal year 2020 and 2021 financial
reports. Because the village does not impose a sales or use tax, the Department
of Revenue (DOR) has not recouped any money from the village. The DOR further indicated
if the village imposes such a tax in the future, the DOR would begin recouping the
fine from any tax distributions the DOR would make to the village.
Other findings in
the audit include the village having ordinances that are not organized,
complete, or up to date; a vacancy on the Board of Trustees the village has not
filled for years; the Board failing to comply
with the village's procurement ordinance to solicit bids or obtain written
contracts for services procured; the Board failing to ensure compliance with
the Sunshine Law; and a failure to develop a records management and
retention policy that includes electronic communication.
The complete audit of the Village of Leslie can be found here.
