Severe lack of oversight lands Niles back in fiscal emergency

There’s so much finger-pointing going on in the Niles administration building over the way public funds were handled in 2012 that residents may be prompted to ask, “Who has been minding the store?” The short answer: No one.

That’s not our assessment; it’s the opinion of the Ohio Auditor’s Office, which this month released its audit of Niles city government’s financial transactions in 2012. The bottom line, as a Vindicator story characterized it: The Trumbull County city’s financial house is in disarray.

So, who’s to blame? Just about everyone who handled Niles’ money two years ago. It is noteworthy that one of the key players in this sordid affair, Phyllis Wilson, then a clerk in the Niles Treasurer's Office, is awaiting trial on a charge of stealing $142,772 dating back to 2009.

That problem, discovered in a routine 2012 audit and labeled “good-old-fashioned stealing” by Ohio Auditor David Yost, was followed by a declaration in October by Yost that the city will be placed in fiscal emergency until it can get various problems fixed. Among them is the water department running a deficit of more than $2 million.

The 2012 audit reveals a level of incompetence or sheer mismanagement that should be cause for concern for the city’s taxpayers.

The audit, the most recent one complete at this time, says there were problems in 2012 with the oversight of Wilson’s work and a monthly process for making sure that all utilities payments the city received made it to the proper bank account, The Vindicator’s Ed Runyan reported Sunday.

“There was no indication that monthly reconciliations prepared by [Wilson] were reviewed by” Niles Treasurer Robert Swauger, the audit said.

CHECKS, BALANCES FAILED

Swauger, who has a banking job in addition to being part-time city treasurer, said of Wilson’s purported thefts: “There were checks and balances that obviously failed.”

Charles Nader, Niles’ full-time auditor, said the $142,772 theft was the responsibility of the city treasurer’s office.

“We’re bookkeepers,” he said of his operation. “It didn’t happen in our department. The money goes to the treasurer’s office. We don’t handle money.”

But Swauger said verifying all money that Wilson handled involves the auditor’s office, in addition to the treasurer’s office. “We’re not in balance with the auditor’s office,” Swauger said.

Council President Bob Marino is absolutely right when he said that the failure of city officials to reconcile the utility payments monthly so that Wilson’s thefts could have been detected is “appalling.”

“I can’t understand how the books were not reconciled monthly. How do you not balance your checkbook monthly?” Marino asked. The city hired the auditing firm Packer Thomas to reconcile the city’s books. The work isn’t done, and he doesn’t know the cost for Packer Thomas’ work, Marino said.

The state fiscal emergency designation means that a fiscal oversight commission is now responsible for Niles’ finances and will work with city officials to not only eliminate the budget deficit, but to develop a five-year budget forecast that shows a positive balance each year.