Niles is in compliance with many of auditor’s suggestions

By Jordan Cohen


A report issued by state Auditor Dave Yost concludes the city’s accounting methods “are not in complete compliance” with the Ohio Revised Code, but many of its recommendations for improvements were actually adopted before its public release on Yost’s website Jan. 30.

“We already made a number of these corrections, many of them months ago,” said city Auditor Giovanne Merlo.

The 46-page Report on Accounting Methods, authored by the state auditor’s Local Government Services Section, is required by state law for municipalities in fiscal emergency. Niles has been in that designation since October 2014. The local government section consists of the city’s two state-appointed fiscal supervisors.

Included among the recommendations is one for the city auditor to maintain “written procedures regarding the payroll process” and preparation of “a comprehensive payroll policy.”

“We corrected payroll over a year ago,” Merlo said.

Another now-outdated section cites issues in the income-tax office including the discovery of boxes of checks that were unopened for months in early 2016. Last July, however, six months before the report’s release, city council voted to contract with the Regional Income Tax Agency for its tax collections. The city eventually abolished the income-tax office.

Conversion to RITA was included in the most-recent version of the city’s fiscal emergency recovery plan that also was approved by council last July.

“By the time our field work was completed, the information was accurate based on our interviews with the city,” responded Dominic Binkley, the state auditor’s public information officer in a written statement to The Vindicator. “However, because there is a time lag – sometimes months – between completion of the field work and release of the report, changes are bound to be made.”

Binkley said as part of its due diligence, auditors met with the city to find out if updates were required before the report was released, a meeting the information officer said occurred last September or October.

“In this case, the city had no changes,” Binkley wrote. “If they had noted changes, we would have made them in the report.”

Niles is not yet in compliance in several major areas listed in the report. Those include a disaster-recovery plan for information technology and accounting functions in the event of a serious incident, written policies and procedures for capital assets and verification of the assets’ existence.

Merlo said work on the disaster-recovery plan has been going on for six months. The capital assets recommendations are more challenging and may require external assistance.

“The city has never done it ... and we know it’s something we need to accomplish,” he said.

The report, though disseminated to the public, is intended for the Financial Planning and Supervision Commission that has overseen Niles’ expenditures since the fiscal emergency declaration. Quentin Potter, commission chairman, said he plans to discuss it with the fiscal supervisors at the commission’s Feb. 15 meeting.

Mayor Thomas Scarnecchia, however, indicated to The Vindicator he is not concerned about the compliance issues yet to be resolved.

“They can talk about noncompliance, but all I know is we’re in the black and we’re working to stay above water,” the mayor said.

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