The City of Indianola is years behind on its state‑required financial audits and is operating with a long list of material weaknesses, significant deficiencies and legal compliance violations, according to an independent auditor’s report on the city’s 2019 financial statements.
The report, dated August 1, 2025, shows city leaders are still cleaning up basic bookkeeping, budgeting and internal control problems from six years ago, even as they prepare budgets and make spending decisions today.
Material weaknesses in financial reporting
Auditors from Tann, Brown & Russ Co., PLLC reported multiple material weaknesses in the city’s overall financial reporting system, including the city’s reliance on the audit firm itself to draft the annual financial report because staff lacked the expertise to prepare statements in accordance with generally accepted accounting principles. Prior‑year audit adjustments were not properly entered into the city’s accounting system, meaning internal reports did not match audited balances or carry-forward fund totals.
The report notes that numerous posting errors had to be corrected during the audit, including duplicated entries, revenues posted to expenditure accounts, expenditures posted to revenue accounts and misclassified capital outlay costs. Bank reconciliations, investment account reconciliations, payroll liabilities, water meter deposits and interfund transfers were not reconciled on a timely basis, leaving balances in the city’s records that did not reflect actual cash or liabilities owed.
Cash, payroll and bank control breakdowns
Auditors found that year-end audit adjustments for previous years had not been recorded, payroll liability accounts for taxes, retirement, insurance and garnishments were not reconciled to detailed balances, and some customer water‑sewer meter deposits remained in liability accounts even after being applied to final bills. Invoices and supporting documentation could not be located for some payments, and for nearly half of the employees tested, the city could not produce required payroll direct deposit authorization forms.
At the airport fund, only one authorized signer — the board chairman — was on the bank account, contrary to recommended controls requiring dual signatures on checks, which auditors said exposed the fund to a higher risk of improper payments. The city also failed to reconcile and monitor investment accounts during the year, so internal reports did not accurately reflect investment balances and activity.
Budgeting, reporting and public notice failures
Beyond internal accounting problems, auditors cited a series of legal compliance violations involving the city’s budget process and public transparency. The city did not submit its audited annual financial report to the Mississippi Office of the State Auditor within the required 13 months of year‑end, significantly delaying the audit process and prompting the state to classify the issue as noncompliance. Budget‑to‑actual financial reports that should have been provided monthly to the mayor and board of aldermen were only produced on a semi‑annual basis, limiting officials’ ability to oversee spending.
The city could not locate documentation showing it had published required newspaper notices for the availability of prior audits, adopted budgets, and the refuse collection fund’s annual revenues, expenditures and customer information. Several expenditure line items exceeded approved budget amounts without documentation of permissible exceptions, leaving the city out of compliance with state budget statutes and potentially exposed to fines.
Violations of state
purchasing, tax and court laws
The report details multiple instances where the city failed to follow state purchasing laws, inventory rules and other statutes governing public money. For several large purchases tested, the city could not provide documentation that required bidding procedures or written quotes had been obtained. Property and equipment records were not updated for acquisitions and disposals during the year, and the city did not maintain documentation of a complete annual inventory, leaving capital asset records inaccurate.
Auditors said the city did not consistently remit state court assessments on a monthly basis, leaving nine months of court assessments unpaid at year‑end, and also failed to follow state rules for using the E‑Verify system and maintaining I‑9 documentation for new employees. Fees withheld by the county tax collector for vehicle ad valorem taxes were netted against revenues instead of being recorded as expenditures, which understated both revenues and expenditures, while old outstanding checks that should have been turned over to the state as unclaimed property remained on the city’s books.
Late minutes, weak documentation and city’s response
Even basic record‑keeping of city and board actions lagged behind statutory requirements. Minutes for some meetings of the mayor and board of aldermen were not organized and maintained in the official minute books within the required 30 days, and the Airport Board could locate minutes for only one monthly meeting because a former manager who kept the records had died.
In nearly every finding, city officials responded that procedures “will be implemented” to correct the weaknesses, including better training, monthly reconciliations, improved filing systems, and revised budgeting and publication processes. But because these corrective steps were still being promised in a report dated 2025 for a fiscal year that ended in 2019, the document underscores how far behind Indianola remains in bringing its books, its audits and its basic financial governance up to date.
