Louisiana Drinking Water Loan Program Faces Financial Concerns in Recent Audit

According to a recent audit conducted by the Louisiana Legislative Auditor's Office, the Louisiana Office of Public Health has come under scrutiny for its mismanagement of finances in the clean drinking water fund for the fiscal year ending in June 2023.
Audit Findings
The audit revealed several weaknesses in the management of cash, financial reporting, and payroll within the Drinking Water Revolving Loan Fund Program. Established in 1997, this program aims to provide low-interest loans and technical support to public water systems to ensure the delivery of safe drinking water. It is primarily funded through grants from the U.S. Environmental Protection Agency and some state funds.
Financial Reporting Errors
The Office of Public Health was criticized for failing to properly review the fund's financial reports, leading to various errors that needed corrections. For instance, $2.7 million of statutory dedicated funds were inaccurately reported as operating revenue instead of non-operating revenue. Moreover, $855,606 of unearned revenue was not correctly reflected in the statement of net position, causing issues with accounts payable.
Non-Disclosure Issues
Furthermore, the audit highlighted three crucial elements required by the EPA that were not disclosed in the office's loan receivable note. This lack of transparency raised concerns regarding the management of grant cash, resulting in overdrawn federal awards within the drinking water program.
Payroll Expenditure Concerns
The audit also flagged concerns regarding the approval of payroll expenditures, as some transactions were not properly authorized by employees' supervisors in accordance with state policy. Out of a sample of 40 transactions totaling $833,436, two time stamps, or 5%, were found to be unapproved.
Compliance and Conclusion
Despite these financial discrepancies, the auditors noted that the office generally complied with the fund's financial statement requirements. However, the issues identified raise significant concerns about the transparency and efficiency of financial management within the Drinking Water Revolving Loan Fund Program.