New report from Auditor Fitzpatrick identifies an increased risk for fraud in the City of Louisiana because of poor oversight of the city's water accounts and details more than $60,000 in fines because of lacking financial reporting

A report released today by Missouri State Auditor Scott Fitzpatrick finds officials in the City of Louisiana need to cut down the risk for fraud by increasing oversight of adjustments made to city's water bills and need to improve their lacking financial reporting that originally resulted in $196,500 in fines from the state, but now has been reduced by more than $130,000 because of assistance from the State Auditor's Office. The report, which was requested by the Louisiana City Council and gives the municipality a rating of "fair," also identifies $900 in missing city funds and notes the city's inadequate policies for overtime pay.

"While our audit did not identify any evidence of major fraud in the City of Louisiana, it did uncover a number of areas where city officials need to improve their level of oversight and accountability to ensure taxpayer dollars are not stolen or wasted in the future," said Auditor Fitzpatrick. "Adjustments made to water bills without supporting documentation present an enormous opportunity for fraudulent activity and I'm glad to see the city is taking steps to ensure all adjustments are necessary and properly handled."

Fitzpatrick added, "I am also encouraged by the city improving its financial reporting process to ensure its financial statements are filed on time. The inability to file the 2023 report timely ended up costing taxpayers of the City of Louisiana $196,500 in fines and somehow the city was not aware of this until we brought it to their attention. I understand they intended to file the report properly, but the truth is city officials failed to perform a basic function that they managed to do successfully both before and after this incident. I'm glad we were able to assist them in reducing the fine amount by more than $130,000 so the burden on taxpayers could be greatly reduced, but this is something that should never have happened and should never happen again."

During the audit period, the city did not have policies or procedures requiring Board approval or documentation to support water account adjustments. Water records indicate the city received approximately $803,000 in water revenues during the year ended May 31, 2024, and personnel posted a total of 655 adjustments, totaling approximately $373,000, during that time. A review of the list of adjustments for the 3 fiscal years ended May 31, 2024 found many individuals with adjustments in multiple years or significant adjustments. A review performed by the city of the fiscal year 2024 adjustments identified 31 inappropriate adjustments totaling over $2,000 for 26 individuals. Further review by the State Auditor's Office (SAO) found some additional adjustments were inappropriate because city staff processed them without accurate supporting documentation or any explanation of the adjustment reason.

The audit also found proceeds from some scrap metal sales totaling $900 were not deposited and are missing. The city allows employees to take extra scrap metal to a local scrap metal company and sell the metal, but the funds received for the sale are to be turned over to the city. Reports from the scrap metal company for the period December 2019 through December 2023 noted city employees received approximately $2,300 for scrap metal sales, but city deposit records indicate only approximately $1,400 in scrap metal income was deposited, a difference of $900. The city has not taken any action to investigate the difference.

Additionally, the audit found the city does not have a written policy for overtime to address the hours, including non-working time, to be considered when calculating overtime. A review of the timesheets and payroll payments for all employees for November 2023 and July 2022 noted 17 employees who were paid at time and a half if they worked more than 8 hours a day, even though the employees were not working more than 40 hours a week. The city paid approximately 170 hours of overtime for July 2022 for employees who did not work a total of 40 hours in a week because the city counted holiday or leave hours as part of the 40 hours worked during the week.

The final finding in the audit details how the city failed to submit its year ended May 31, 2023, annual financial report to the State Auditor's Office (SAO) until April 18, 2025. As a result, the Missouri Department of Revenue (DOR) assessed fines totaling $196,500, which the DOR collected by withholding monthly sales tax distributions. The Mayor was not aware of the DOR withholdings until he was informed by the SAO. After being informed by the SAO, city officials determined the report was erroneously sent to the DOR in August 2024, rather than to the SAO. The Mayor contacted the SAO in July 2025, and provided documentation of submission to the DOR and the SAO agreed to show the report received as of the August 21, 2024, DOR submission date. Even with the earlier submission date, the report was almost 9 months late and the city is subject to over $60,000 in fines.

The complete audit report is available here.