Audit findings tarnish WRAP, Sunshine anew

A recently released state audit has tarnished anew the image of two nonprofit agencies in Warren with the noble purposes of providing decent housing for low- income residents and stimulating economic development in the city.

The state auditor’s office did not mince words in its biting evaluation of the operations at those two agencies, Sunshine Inc. and the Warren Redevelopment and Planning Corp.: “The auditor’s staff determined there are serious weaknesses in their internal financial controls. The records are sloppy, and there are numerous financial management system weaknesses as are documented in the schedule of findings.”

Findings against Sunshine Inc. included failure to pay property taxes to Trumbull County on time, failure to document a rental agreement with WRAP, a failure to properly track its capital assets and a failure to provide complete financial statements for the 2012 audit.

Findings against WRAP included 27 accounts recorded on the financial statements that did not agree to the balances in WRAP’s general ledger, inaccurate bank reconciliations, lack of support for notes receivable and others.

The audit also stated that the sloppy and less-than-transparent accounting procedures “could result in the occurrence of misstatements that are caused by error or fraud.”

The audits grew out of criticism in 2013 of Sunshine when the Trumbull County Treasurer’s office threatened to foreclose on 87 Sunshine Inc. properties that had gotten $187,311 behind on property taxes. The audit took an unusually long period of three years to complete largely because of insufficient supporting documentation and missing records from the agencies.

In both reviews, auditors pointed out “a lack of effective control and accountability over federal funds” that the private agency receives from the city of Warren.

‘NOTHING WRONG’

In the face of these distressing findings, former Warren Auditor Anthony Iannucci, who oversees both nonprofits , insisted that the state found “nothing actually wrong.” Though it is true, as Iannucci points out, that the audits did not make any serious findings of recovery for misappropriated or misused funds, his attempt to spin the audit conclusions as “accounting issues that are nonmaterial” is disingenuous at best.

The state has forwarded the audits, released March 31, to Warren City Council for further review and oversight. Considering the hodgepodge of criticisms center on public funds – federal tax dollars from agencies such as the U.S. Department of Housing and Urban Development awarded to Warren and then siphoned to WRAP and Sunshine – council members and other city officials cannot ignore the disturbing conclusions. Most of the findings appear to point to a disregard for proper accountability and transparency in the use of public monies.

We would suggest council initiate a comprehensive investigation into the operations and financial accounting of both nonprofits. If need be, it also could call for assistance anew from the state auditor’s office to help in further investigation and formulation of concrete directives to correct the myriad weaknesses the audits discovered.

Perhaps in the intervening three years, considerable progress has been made in dealing with the problems cited by the newly released audit. Iannucci points out, for example, that the amount of property tax delinquencies has been shaved considerably and should be erased completely within three years.

But until the agencies receive findings that could clear the stains of this spring’s audit, the perception of irregularities in the two agencies will persist. Three years ago, Warren City Councilman Alford Novak, a leading critic of insufficient accountability of the agencies, said the foreclosure problem reduced their credibility to zero. The new audit will do little to raise that rating.

That’s why it is incumbent on Warren leaders to proceed with all due diligence to take a deep look into present-day operations. If they continue to fall short of maximum accountability, transparency and professionalism, concrete mandates to solve them must be implemented.

After all, the two organizations with honorable goals of improving the quality of life for all in the city of Warren will continue to fall short of their potential until lingering blemishes on their integrity are lifted.