(The Center Square) – According to two years of audits, the Louisiana town of Melville could be in danger of being unable to operate and face a takeover by a fiscal manager.
The Louisiana Legislative Auditor’s office contracted certified public accountants from the accounting firm Daigrepont & Brian to examine the town’s finances for both 2021 and 2022 and found that the city had not corrected 10 findings repeated in both audits. The accountants said in the report that the town had “large outstanding liabilities and inability to comply with the bond requirements with regards to reserves.” They also said they had “substantial doubt” about the ability of the town to continue as a “going concern.”
According to the latest audit, the town’s fund balances are negative $103,391, with $620,809 in revenues and $744,973 in expenditures. The report says the town will finance the deficit with future revenues.
In both audits, the town failed to pay its payroll taxes on time and didn’t reconcile deposits of city residents to its cash accounts and had several outstanding bills due, including from some board members. Auditors said the town allowing customers to use city utilities without payment could put it afoul of state law governing donation of public funds.
Auditors also found the town didn’t have enough separation for financial and accounting functions because of a lack of staffing, didn’t possess adequate internal financial controls, and didn’t properly document disbursements.
On the transparency front, the town also failed to maintain meeting minutes of its board and didn’t comply with its bond covenants and U.S. Department of Agriculture reporting requirements. The requirements of the bond issues for the town required officials to deposit $635 and $884 per month in the town’s reserve account and the contingency and depreciation accounts, respectively. The town also didn’t segregate its utility revenues from its other accounts as required by the U.S. Department of Agriculture.
The town, even though it had submitted the same corrective action plan for both audits, failed to file its financial statements with auditors on time.
This isn’t the first time the town’s finances has placed it under the scrutiny of the Legislative Auditor’s office. Auditors questioned the town’s ability to continue from its 2020 audit due to many of the same issues brought up by the 2021 and 2022 reports.
