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Dayton -

Auditor of State Mary Taylor released the 2005 audit of the City of Dayton today. The audit reveals that the city’s financial accounting system was unable to produce accurate documents in a timely manner showing how more than $32 million in federal grant money was spent. The audit also found carelessness in the city’s handling of various accounts and payroll procedures.

“In order to properly account for every tax dollar collected and spent, the city must implement policies and procedures, commonly referred to as internal controls, to ensure that every tax dollar is spent legally and appropriately,” Taylor said. “The failure to do so could increase the potential for fraud or theft of public funds. It is imperative that Dayton officials consider the recommendations made in the audit report to improve oversight in the management of their financial operations.”

The audit shows that the city received $32,306,795 in federal grant money and that the city’s accounting department improperly relied on individual department heads to manually provide information documenting how the money was spent. Furthermore, the city did not have procedures in place to show that the money the city received matched what was spent in each department. As a result, there were differences in account balances when compared to the city’s financial accounting system. Auditors say there was no assurance that the money city official’s said was spent on federal programs was accurate. Repeated attempts to obtain the correct information caused a ten month delay in the release of the final audit report.

Additional findings listed in the audit report illustrate other financial accounting practices that need improvement, including:

• Several deposits lacked proper documentation that could prove the funds were placed in the proper account.
• The failure to transfer municipal court funds to the city on a monthly basis, causing an overstatement of more than $37,000 in the courts’ accounts.
• Not separating water, sewer, storm water, container and disposal money into separate accounts when residents made their payments and improperly charging residents for storm water bills.

In several instances, the city is recognized for taking steps to improve financial controls, but Taylor says better internal controls are needed to improve the management of public funds.

The Ohio Auditor of State’s Office is one of the largest accounting offices in the nation.  The office strives to ensure that all public funds are spent legally and appropriately and works aggressively to root out fraud, waste and abuse in public spending. Taylor encourages anyone suspecting fraud or misspending of public dollars to contact her office toll free at 1-866-FRAUD-OH (1-866-372-8364).