State finds flaws in office of Mahoning County treasurer
YOUNGSTOWN — Ohio Auditor Keith Faber has issued a finding of noncompliance involving the Mahoning County Treasurer’s Office for 2021.
The state office found the Mahoning office failed to provide information to allow its office and the county auditor’s office to reconcile timely county financial records for June through December last year.
The findings do not indicate that any money is missing.
The reason reconciliations are important, however, is: “Lack of completing an accurate and timely reconciliation may allow for accounting errors, theft and fraud to occur without timely detection,” the Ohio Auditor’s Office stated in the recently released 2021 financial audit for Mahoning County.
Dan Yemma, Mahoning County treasurer, has objected to the way the issue has been characterized by the state auditor’s office, saying the issues are not “accounting errors” and do “not rise to the level of a finding.”
Ohio law requires the county treasurer’s office to report each day to the county auditor items such as the amount of taxes and other funds received and total deposits and balance in the treasury, the finding states.
According to a 2018 Ohio County Treasurer’s Manual, the treasurer’s office “as cash manager, collects all cash received by the county,” and the funds are “balanced” with the county auditor’s office on a daily basis through use of a “form 6” “to ascertain that both offices’ records are in agreement.”
The finding states, however, that “due to turnover in key personnel, the daily form 6 was not always completed accurately, leading to delays in performing the monthly bank to book reconciliations” for June through December 2021. The June reconciliation, for example, was completed Nov. 16, 2021, and the July, August, September and October reconciliations were all completed in December. The November and December reconciliations were each completed two months later.
The audit also found reconciliation “variances” in investment transactions for July 2021 of $56,699, for August 2021 of $76,130, for September 2021 of $131,797, for October 2021 of $828,772, for November of $1,623,143 and for December 2021 of $849,590.
Those were the “variances” between the amount on the books compared with the amount in the bank, the finding states.
The Ohio Auditor’s Office stated that these “variances are the result of unposted investment transactions such as interest income, bank service charges, purchase, sales, and realized gains / losses.” The items were corrected as of Feb. 11, 2022, the audit states.
The audit notes that “a number of county elected officials play important roles in ensuring the financial stability of the county” and that the state auditor “recommends that all county officials with responsibility for the county’s finances work collaboratively to meet their joint obligations” to prepare and verify “accurate and timely reconciliations of all accounts and funds.”
Yemma wrote a July 29, 2022, letter to the Ohio Auditor’s Office regarding the finding, stating that the state auditor’s office informed him of late reporting by his office of financial information. That occurred during a meeting July 21, 2021, when state auditor’s employees informed him that a finding would be issued.
Yemma’s letter asked the state auditor’s office to “provide detailed documentation showing” the late reporting. Yemma added that he objects to the finding, but “if such weaknesses exist, they must be identified, resolved and prevented from reoccurring.”
On Aug. 12, 2022, Yemma wrote a followup letter to the state, stating that officials with the state auditor’s office met with Yemma’s staff Aug. 9. Yemma, however, stated that the state auditor’s office sent Yemma an email one hour before the meeting containing 141 pages of auditor’s notes and worksheets that Yemma tried to review prior to the meeting, but there was insufficient time.
Yemma stated in the letter that one of the instances cited in the finding involved instructions his office received from the state office in December 2021, but the auditor’s office later indicated it had given an erroneous number, so the treasurer’s office changed the number on Jan. 21, 2021.
Yemma stated he does not know “why this is being shown as Treasurer error. It is not uncommon for reconciling items to require adjustment, and this came to us from our auditor’s.”
Yemma added that the “delay in completing monthly bank reconciliations was rectified,” and the treasurer’s financial statements “are not adversely affected.” He added that the “delay has been corrected, and at least one of the errors was not the Treasurer’s.”
He stated that the delayed reconciliations did not result in accounting errors, and he objected to the matter being called a “finding.”
The State Auditors’s Office later stated that it had met with Yemma’s office Aug. 9, and “several examples of reconciliation process errors were walked through to demonstrate where the numbers were obtained from and what they represented.” It stated that it had provided the “detailed documentation” to Yemma’s office “as soon as it was available.”
The state office stated that the number its auditors gave to the treasurer’s office in error was a “date,” and that it did not affect any dollar amount or underlying issue it had raised.
Furthermore, the state auditor’s office concluded that “timely and complete reconciliation are a basic internal control that should be competed by every entity, and we stand by the finding as written.”