The City of Richmond Heights Has Not Filed an Annual Financial Statement Since 2008.

Richmond Heights’ City Council needs accurate and timely financial statements in order to make wise spending decisions – funding pensions, repairing the Kiwanis Lodge, paying off debt, etc.

Under penalty of law, every city in Ohio is required to submit an annual, audited financial statement within 150 days of the close of the fiscal year end.  Generally speaking, the annual financial statement is a compilation of the monthly financial statements over 12 months.

City Council did not receive a copy of its 2008 annual, audited financial statement until October 2010.

And it was bad.  The report contained five “material deficiencies”. 

Here is the definition of a material deficiency in the language of the State Auditor: 

A material deficiency is “a significant deficiency, or combination of control deficiencies, that adversely affects the City’s ability to initiate, record, process, or report financial data reliably . . . such that there is more than a remote likelihood that the City’s internal control will not prevent or detect a more-than-inconsequential financial statement misstatement.”

The five material weaknesses go directly to the City’s shortcomings in financial control:

Finding Number 2008-002: Transfers and Advances

Finding Number 2008-003:  Annual Reporting

Finding Number 2008-008:  Financial Reporting

Finding Number 2008-009:  Bank Reconciliations

Finding Number 2008-010:  Capital Asset Records

The Management Letter written by the Auditor of State concerning Richmond Heights clearly explains the importance of filing accurate and timely financial statements: 

“Failing to file annual reports that are complete an accurate could be a symptom of an inadequate accounting system, inadequate training of personnel in understanding the accounting and reporting process, un-posted or un-reconciled records, or other significant issues affecting the control environment, or which may even pose fraud risks.”

When I asked the Senior Auditor in charge of the Richmond Heights audit review about how our financial preparation compared to other cities, he said, “It is the worst audit I have seen in 15 years.”

Until the deficiencies in financial reporting and financial controls are adequately addressed, should the City of Richmond Heights ask for a tax increase now without all the information it needs to be a good steward of public funds?

To see the complete 2008 audit report and Schedule of Findings:  http://www.auditor.state.oh.us/auditsearch/Reports/2010/City_of_Richmond_Heights_08_07-Cuyahoga.pdf.