The Alabama Department of Examiners of Public Accounts released its audit looking into the Birmingham Water Works. The agency looked at records from May 1, 2023, to May 31, 2025. It identified four findings that support the legislative restructuring of the board into a regional board.
The new board has been grappling with canceling and renegotiating contracts and reporting thefts that occurred under the previous board.
In the last six months, the utility has had to call law enforcement at least twice for theft. One involved an estimated $2 million in stolen copper.
The board has also canceled contracts and questioned others. Among those cut was a $35,000 monthly contract with the Birmingham Business Resource Center, which the board determined did not provide a direct benefit to ratepayers.
According to the report, there were four findings:
- Lack of Policies and Inadequate Internal Controls: The General Manager is responsible for recommending policies to the Board for their approval or disapproval. The Board did not have adopted policies in the place to address property management or purchasing card usage.
- Unapproved Sick Leave Payout: The Board's policy for sick leave stipulates that upon separation of employment, whether voluntary or involuntary, the employee forfeits unused leave accruals and no payment is made in lieu of forfeited sick leave. The former General Manager retired effective June 30, 2024 and received payment on July 4, 2024 for all leave accrued.
- Noncompliance with Alabama Competitive Bid Law: The Board did not comply with the Alabama Competitive Bid Law by maintaining documentation that bids were awarded to the lowest responsible bidder.
- Improper Payment of Director Expense Allowance: The Code of Alabama 1975, Section 11-50-234.1 states that a reasonable meeting expense allowance may be authorized by resolution adopted by the Board. The Board approved a resolution that amended the expense allowance to be paid at $500 for each event, with a cap of $1,000 per month. Several directors were paid the full $1,000 per month even though they did not attend a Board meeting or committee meeting during the month.
"While the Board has adopted certain policies, there was not always proper oversight by management to ensure compliance with and adherence to policies in place. In addition, the Board did not establish and implement effective internal control policies and procedures, nor did they provide effective oversight of the operations to provide accountability. The absence of controls exposed the Board to losses from theft and misappropriation of assets and prevented the Board from complying with applicable laws and regulations," the conclusion says.
An independent audit by a certified public accountant is currently underway to review financial records and assess operational concerns.
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