State Audit Finds Major Violations in Leadwood City Finances

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A state audit of the City of Leadwood in Missouri found widespread financial mismanagement, improper use of federal COVID-19 relief funds, and repeated violations of state law, resulting in an overall audit rating of Poor. The audit uncovered over $103,000 in wasted public resources through unauthorized bonuses, declining General Fund balances, lack of financial controls, and failure to comply with open meetings and records laws.

Why it matters

The audit findings raise serious concerns about the city government's financial practices and transparency, potentially eroding public trust. The misuse of COVID-19 relief funds and lack of compliance with state laws could also jeopardize future federal and state funding for the city.

The details

The state audit found the Leadwood Board of Aldermen authorized over $103,000 in bonuses for themselves, the mayor, and city employees, with the majority of those payments made using ineligible federal COVID-19 relief funds. The city also failed to properly track budgets, segregate restricted funds, and shut off delinquent utility accounts as required. Auditors also documented numerous Sunshine Law violations, including improperly held closed meetings and lack of public notice.

• The audit covered the period from September 2021 through May 2022.
• The city's General Fund has seen expenditures exceed revenues every year from 2021 through 2024.

What’s next

Auditors recommended the city seek legal guidance on recouping the improperly paid bonuses, strengthen internal financial controls, properly segregate restricted funds, and bring all operations into compliance with state law. The city has stated it has begun taking corrective steps.