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Niles 2015 audit finds many of same weaknesses as 2014
By Ed Runyan
NILES
The 2015 Niles government audit released today by the Ohio Auditor’s Office indicates that many of the same weaknesses found in the city’s control over its finances in 2014 persisted into 2015.
No city officials, however, were charged with any wrongdoing in 2015, and the city corrected a weakness in the controls it places on its outsourced self-insurance program, the audit says.
The 2015 audit contained no findings for recovery as the audit did in 2014 when one of the thefts was discovered.
Perhaps one of the most significant findings in the 2015 audit is the city still failed to monitor its financial transactions in a way that would “provide reasonable assurance” that its financial reporting is accurate.
It did say the city’s operations are effective and efficient; the city is complying with laws and regulations; and that it is safeguarding its assets.
“The lack of effective monitoring controls contributed to an environment which allowed for the expenditure of funds contrary to the directives of the governing body and management and incomplete capital asset records,” the audit says.
“Furthermore, the lack of effective monitoring controls allowed for errors related to posting transactions and account classifications,” it says. “Numerous adjustments were made to financial statements for the year ending Dec. 31, 2015, to properly state financial statement amounts.”
These words also were used in the 2014 audit, and city officials likewise responded to the findings by saying it would “continue to work on strengthening its control structure to eliminate deficiencies.”
Also listed as a finding again in 2015 was the failure of the city to list all its capital assets. The city has $37 million in such assets.
The city maintains a partial list of those assets, but it doesn’t include the location of the assets, does not account for changes to the list, and does not account for changes in asset values due to renovation or replacement, the audit says.
City Auditor Giovanni Merlo said, “The findings were very similar to those in the 2014 audit. These issues, for the most part, were corrected in 2016, and we’re moving forward.”
Longtime Niles Councilman Steve Papalas said the listing of assets is something Council President Bob Marino “brings up constantly,” and it’s something some officials “have not worked hard enough on.”
Papalas said the issue of monitoring of fiscal matters has gotten better since Merlo took over as auditor in September 2015. “I think most of that has been corrected late last year,” Papalas said. Merlo became auditor after the resignation of then-Auditor Charles Nader.
The 2015 audit says the capital-asset listing for the water, sewer and electric departments “has not been updated since 1996.” The 2014 audit said the same thing.
The city also in 2015 had not corrected its noncompliance with requirements for recording receipts related to grants. The city received $96,447 from the Ohio Department of Transportation and $5,493 from the Ohio Public Works Commission in 2015 and failed to record the receipt and expenditure or amend its estimated resources and appropriations to account for the funds. Instead, the funds were paid directly to the vendor, the finding says.
The city failed to record such receipts and payouts for $721,000 in grants in 2014.
Janet Rizer-Jones took over as Niles treasurer after Robert Swauger resigned that job in May.
Previous audits have addressed thefts by former assistant treasurer Phyllis Wilson, who stole $142,772 from the city dating back to 2009, and Heidi Powell, former income-tax assistant, who stole $728 in 2014.
The 2015 audit had seven noncompliance findings, same as the 2014 audit.