Bob Foos
Carterville city government has sent an email to its subscribers acknowledging problems highlighted in a recent citizen-petition-audit conducted by the state auditor’s office. It was said the purpose of the email is to add context to the state auditor’s findings, to disclose corrective measures that were underway long before the audit was released, and to be transparent with citizens.
The email also links to an independent audit conducted by the Decker and Pace CPA firm in Springfield.
We are sharing the Missouri State Auditor’s report concerning the City of Carterville while also sharing some additional context.
The report, which covered a previous fiscal year from November 2023 to October of 2024, identifies legitimate weaknesses in the City’s previous financial procedures, budgeting, reconciliations, documentation, internal controls, and financial oversight. The City accepts those findings and has already begun implementing many of the recommended changes.
There is, however, one major financial figure in the report that requires additional context.
The report states that the Water and Sewer Fund ended fiscal year 2024 with a negative balance of $634,029. That figure was based on the City’s accounting records as they existed when they were provided to the State Auditor in March 2025. At that time, the accounting file contained substantial problems, including transactions assigned to incorrect funds, unreconciled balances, duplicate journal entries, incorrect classifications, and other accounting errors. The City disclosed the condition of those records to the State Auditor’s field staff.
The City subsequently undertook an extensive review of those records to better establish beginning balances and properly classify financial activity. This required reviewing thousands of transactions, correcting fund assignments, removing duplicate entries, reconciling balances, and obtaining assistance from a CPA. This process was underway for most of the year 2025.
The refined records were then provided to an independent third-party auditing firm in late 2025 for the City’s required annual financial audit. After reviewing those records and making necessary audit adjustments, the independent auditor did not report a negative Water and Sewer balance of $634,029. Instead, the independent audit reported that the Utility Fund ended fiscal year 2024 with $18,438 in cash and cash equivalents and a total net position of $85,783.
The independent audit shows that utility cash declined significantly during the year. The City spent more than $1 million on capital improvements, including the new well and well house project and related engineering and design costs, in addition to making debt principal and interest payments. The utility system ended the year with very little available cash, and its rates, reserves, financial tracking, and long-term planning clearly needed improvement.
However, there is an important difference that should be made between saying the utility system had inadequate cash reserves and saying that it ended the year more than $634,000 in the negative. The later independent financial audit, prepared after extensive corrections and audit adjustments, did not report or reproduce that same negative balance.
The State Auditor was correct that the City’s previous accounting practices were inadequate and that the City Council was not receiving reliable fund-level financial information. In fact, the substantial differences between the original accounting records and the later audited financial statements demonstrate exactly why improvements to the City’s accounting procedures and internal controls were necessary.
The State Auditor’s report and the independent financial audit should be read together. The State Auditor’s report documents the condition of the City’s accounting practices and internal controls at the time of its review. The independent financial audit presents the City’s later refined and adjusted fiscal year 2024 financial statements.
We are not sharing this report to dismiss or dispute its valid findings. We are sharing it because transparency requires the public to see the report in full, understand what went wrong, understand why some financial figures later changed, and know what the City is doing to prevent these problems from happening again.
Since the audit period, the City has taken steps to improve:
- Monthly bank and fund reconciliations;
- Fund accounting and transaction classifications;
- Budget-to-actual reporting;
- Utility-rate reviews;
- Budget monitoring and amendments;
- Financial oversight; and
- The financial information provided to the City Council and the public.
There is still work to do, but the City is committed to correcting these problems honestly, openly, and responsibly. If you have any questions or would like to sit down and talk about this, please let us know. Everyone involved in your City government is here to serve and be of service to the citizens of Carterville.
