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State Auditor Scott Fitzpatrick releases citizen-requested audit of the City of Waverly

Report details how the city violated the Missouri Constitution by providing year-end bonus payments to city employees and failed to prepare complete budgets in compliance with state law

05/30/2024 - Jefferson City, MO

A report issued today by Missouri State Auditor Scott Fitzpatrick reveals how the City of Waverly, located in Lafayette County, violated the Missouri Constitution by providing employees with year-end bonuses totaling $15,650 over nine years. The report, which was initiated at the request of residents who gathered and submitted 145 valid signatures for a petition audit, also details how officials failed to prepare complete budgets in compliance with state law and failed to monitor budgets to avoid overspending. The audit report gives the City of Waverly a rating of "fair."

"I hope our report gives the residents of Waverly, who took the time to obtain the signatures necessary to trigger the audit, a more detailed understanding of the areas where their city needs to become more efficient and transparent," said Auditor Fitzpatrick. "Our recommendations give city officials a path forward to increase their level of accountability and provide residents with the kind of city government that minimizes waste and uses each tax dollar as effectively as possible."

The report details how the city's Board of Aldermen approved year-end bonus payments to all full-time employees in violation of the Missouri Constitution. The city paid a total of $3,050 in year-end bonus payments to the 4 full-time and 2 part-time employees in November 2021, with employees receiving bonuses ranging from $250 to $750. The city paid $15,650 in year-end bonus payments between December 2013 and November 2021. Additionally, the Board approved pay raises for city employees on January 1, 2022 without having a compensation ordinance to establish the amount of compensation for employees and city officials, and no documentation was provided to support the Board's approval of the raises.

Another finding in the audit notes how the city's budgets for the years ended June 30, 2022, and 2023, did not include all statutorily-required information. The budgets did not include a budget message, budget summary, or actual and estimated amounts for the 2 preceding years. Additionally, the Board does not adequately monitor budget-to-actual receipts and disbursements. As a result, actual disbursements exceeded budgeted amounts for the General Fund by $61,770 and the Street Fund by $11,046 for the year ended June 30, 2022. The audit also found the Board has not adequately segregated accounting duties or ensured a documented supervisory or independent review over various financial accounting functions is performed.

The audit report also highlights several issues that need to be corrected with the city's utility system. The report details how controls over the non-monetary adjustments made to the customer utility accounts need to be improved because adjustments under the current system are not reviewed and approved by an independent person and documentation of the reasons for the adjustments is not always retained. Additionally, late penalties are not always charged and utility services are not shut off in accordance with ordinances. The audit also found city employees are not billed the base rate (first 1,000 gallons) for water or sewer usage (a combined value of $49.54 per month for each employee), and several city employees were also not billed a trash fee, primacy fee, or franchise fee (combined value of $9.92 per month for each applicable employee, but increased to $16.09 in June 2022). The total amount employees were not charged during the year ended June 30, 2022, was $3,059.

Additional findings in the audit include a failure by the Board to consistently comply with Sunshine Law for closed meetings, insufficient controls over city computers that make city records susceptible to unauthorized access or loss of data, and the lack of a records management and retention policy that includes electronic communication in compliance with the Missouri Secretary of State Records Services Division guidance.

The complete audit of the City of Waverly can be found here.