Pending suit against auditor prevents objectivity, official says

By Peter H. Milliken

Hire your own auditing firm for the next three years, the state tells the county.

YOUNGSTOWN — The state auditor’s office is declining to audit Mahoning County’s 2007, 2008 and 2009 books and has told the county to hire an independent public accountant from the state-approved list to perform that task.

The news came to county Auditor Michael V. Sciortino early Tuesday in an e-mail from Martin R. Kubic, chief of the state auditor’s Youngstown office, and Sciortino relayed it to the county commissioners at their meeting that morning.

Sciortino attributed the state’s refusal to a pending lawsuit the county filed against Ohio Auditor Mary Taylor in Franklin County Common Pleas Court concerning the county’s 2005 audit.

To perform an audit, the state auditor’s office must have “independence,” meaning that it can perform an independent, objective review of the county’s financial statements, “and this litigation has gotten to a point where, apparently, that independence is now lacking,” Sciortino explained.

In the past, Mahoning County borrowed money internally from itself. “The county treasurer would virtually sell notes of our treasury-invested dollars to the county commissioners for various projects,” Sciortino said.

State law forbids this type of borrowing unless the county has sufficient general fund balances to equal the amount borrowed, he said. The state auditor cited the county for engaging in that practice because Mahoning’s general fund balance was insufficient, Sciortino added.

The county’s lawsuit, which will go to trial this summer, asks a judge to declare the true meaning of the state law on this matter, Sciortino said.

Sciortino said the situation creates a severe risk of delay in the auditing process.

The county must fill out various state auditor’s office forms, seek and review bids, and have the state auditor’s office approve the county’s choice of outside auditor for the three years, he said.

“We are already behind the 8-ball. It’s April 8. Other counties have already engaged in their audit,” Sciortino told commissioners. Sciortino added he doesn’t want to be presenting final 2007 audit documents to the commissioners in November or December 2008.

He also said hiring an outside private firm would likely cost the county extra money. “The work needs to get started now,” he said. “I don’t have the bargaining power on my side because we’ve got to get a firm in here as quickly as possible.”

The state auditors are familiar with the county’s accounting system and where to find the records, said Carol McFall, chief deputy county auditor. “When you bring in a brand new firm, they have to learn how to do everything in Mahoning County all over again from scratch, so there will be more time and cost involved just because of the learning curve,” McFall added.

Last year, the state auditor charged the county about $166,000 to audit the county’s overall $432 million budget.

The state auditor generally gives an independent firm a three-year contract to make the effort worthwhile for the firm, McFall said.

Delays in filing financial statements displease lending institutions, she added.

The audits are reported to outside bond rating agencies, such as Moody’s, Sciortino said. “That affects our ratings, and that affects how, when and the costs associated with borrowing money,” for things such as road and sewer projects, he explained.

Sciortino said the situation is “very disheartening” to him because he said the state auditor does a good job and his office works well with the state office.

Anthony T. Traficanti, chairman of the county commissioners, declined to comment after the meeting.