Bay Village Financial Audit

The subject of finances has returned.  It was discussed on another site in September and commented on recently here.  I will review for those that missed the discussions.

Pages 78 and 79 of the city's most recent financial report show material weaknesses*/noncompliance.  It was obvious that some had not read the report, just chose to defend it and questioned the meaning of such findings. The feeling was it could mean that a CPA or a bank teller made mistakes.  The mistakes then compounded by the fact that no one caught them.

The truth is in the report which clearly states this was intentional: "Client Response: It is my understanding per the former Director of Finance that the transfers were discussed and approved within the budgeting process in Finance Committee but however was not included in an appropriation ordinance for council approval."

As a red flag,  the findings in this report caused the state to go back and audit the previous year.

Some even commented -  so what this is common.  It may be common if they were mistakes, but this was done with knowledge of action. Some experts would argue this is systemic. It raises questions regarding intention and ethics.  The questions it raised for me were - why wasn't it presented to council as is required? On what authority was the decision made to bypass council? What were the concerns in getting an authorization from council?  What were the ramifications if council had not approved these illegal moves? Has it caused other problems?

*A significant deficiency in internal controls that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.  When one or more internal controls, put in place to prevent significant financial statement irregularities, is considered to be ineffective.

http://www.auditor.state.oh.us/auditsearch/Reports/2013/City_of_Bay_Village_12-Cuyahoga.pdf