Toledo audit lists errors, but doesn't address 'missing' millions

A year after Toledo officials discovered $8.2 million that was previously unaccounted for in the budget, a state audit of the city’s 2017 finances released Thursday makes no mention of the misplaced millions or misappropriated funds.

Mayor Wade Kapszukiewicz said Thursday the money did not come up in the report because the issue had been resolved before the end of the year.

One Government Center in Toledo.

“The $8.2 million was always there. It was never lost per se, but it was not properly accounted for,” Mr. Kapszukiewicz said. “By the end of last year, the money had been properly accounted for.”

The audit came after it was revealed that, as a result of illegal bookkeeping, more than $8 million had been sitting in the wrong account for five years, leading to confusion about how much money the city had on hand. An investigation revealed the money was meant for infrastructure projects and was later moved to the right account.

The money had not been found in the city’s annual audit because officials had tried to conceal it, according to previous reports in The Blade.

The money surfaced under former Mayor Paula Hicks-Hudson, who asked Ohio Auditor David Yost to conduct a review. It marked the first time in 32 years that the state auditor, rather than a private firm, managed the city’s annual financial review.

“We knew we were inheriting problems, but we’ve already taken steps early in our administration to show our financial house is in order,” the mayor said.

The review identified several errors in city accounting that require correction, but nothing rising to the level of the $8.2 million.

Some findings relate to city staff’s access to change financial-system software, while others concerned late reporting of certain adjustments to the financial report, inadequate identification of “unidentified” capital assets, slow monthly reconciliations of city bank accounts, and two errors in expenses for certain federal grants.

“As expected, the audit revealed several things the city did not do properly in 2017 and previous years,” Mr. Kapszukiewicz said in a prepared statement. “We have already begun the process of correcting the issues identified by the auditor of state’s office.”

Among problems the auditor’s office urged the city to fix were more than 1,000 outstanding checks issued between 2010 and 2016 and other unresolved items totaling $805,000.

The audit also found the city had overstated two grant programs by nearly $2.8 million.

Contact Liz Skalka at lskalka@theblade.com, 419-724-6199, or on Twitter @lizskalka.