Audit: Credit cards, cell phones lack policy

The audit lists four noncompliance issues and 20 recommendations to improve the city’s financial operations.

YOUNGSTOWN — The city ended 2007 with deficits in 10 funds, spent more money than it budgeted for 21 other funds and still doesn’t have a written policy for the use of city-owned credit cards, according to a state audit.

The audit of the city’s 2007 financial statements doesn’t include any findings for recovery.

But it lists four noncompliance citations or findings and 20 recommendations to improve the city’s financial operations.

In comparison, the 2006 audit listed one finding for recovery, nine noncompliance issues and 21 recommendations. The 2005 audit had no findings, seven noncompliance citations and 16 recommendations.

Some of the citations and recommendations on the 2007 report have been listed on annual audits going back several years.

Two examples of long-standing recommendations from the auditor’s office that the city hasn’t implemented are:

UA formal written policy for city-owned credit cards.

UA formal written policy for city council and the court system for city-owned cell phones.

City Finance Director David Bozanich said he was generally satisfied with the state audit.

“It’s almost impossible to fix everything,” he said.

The audit of the city once again shows several funds ending the year with a deficit and numerous others spending more than budgeted.

Some of those funds, Bozanich points out, rely on state and/or federal financial assistance.

The money from state and federal agencies comes to the city, but it sometimes arrives after a fiscal year ends, he said.

At the suggestion of the state auditor’s office last year, the city changed its policy regarding no- interest loans to businesses.

The city provides the money to companies for business development. The loan is backed by an irrevocable letter of credit from an accredited bank.

The city incorrectly classifies the loans as “cash and cash equivalents” rather than “loans receivable,” the audit states.

Because of that, the city’s general fund appears to have a surplus when it actually has a $7.4 million deficit, according to the state audit.

The city has long disputed the accuracy of that criticism because the loans can be collected at any time, Bozanich said.

After the 2006 audit was released in November 2008, the city agreed that future loans would carry a 0.25 percent interest rate and be reclassified as loans.

But that remained a problem for the city in the 2007 audit because the policy wasn’t changed until late last year.

skolnick@vindy.com

The Ohio auditor’s office issued a report of Youngstown’s financial statements for 2007. The audit includes four noncompliance citations or findings and 20 recommendations to improve its financial operations. Here are some of the more notable issues:

No-interest loans given by the city to businesses, backed by an irrevocable letter of credit from an accredited bank, were incorrectly classified as “cash and cash equivalents” rather than “loans receivable.” It made the general fund appear to have a surplus as of Dec. 31, 2007. The auditor’s office said the city actually had a $7.4 million deficit. This has been an ongoing issue. Based on the auditor’s recommendation, the city has reclassified the loans.

Nine other funds ended 2007 with deficits.

The city failed to properly publish the availability of its financial report.

City council and the city court system need to adopt formal, written policies for city-owned cellular telephone use. This has been an ongoing issue.

A majority of city departments don’t have formal written policies regarding city-owned credit cards. This also has been an ongoing issue.

The city doesn’t have a code of conduct.

The city, except the court, hasn’t sought bids for a new depository for public money since 1999.

The city finance department doesn’t keep track of accumulated time [given instead of overtime] earned by police officers or firefighters.

Source: Ohio auditor’s office