TARTA board blasts Gee over "unauditable" books

From WSPD News:

The TARTA Board met this morning in Toledo and lambasted its director for presenting to the State Auditor's office last month a set of books for 2010 finances that were returned, "un auditable". Trustee Rober Vasques, says Gee's preparation was totally "unacceptable" and the members of the board were "blindsided" by it. State Auditor Dave Yost has given TARTA 20 days to replace the missing documents and resubmit the 2010 finances or face legal action. Bonita Johnson, board president ordered Gee to put together an action plan to prevent such a recurrence by February 24th to, while Maumee board member Francis Fey chastised him saying, "It is embarrassing to us... and this damages our reputation."

Apparently, General Manager James Gee didn't bother to share the upcoming finding of "unauditable" with the board prior to it being issued by the State Auditor, nor did he inform them of his excuses.

But as board members, they should have been asking about the status of an audit that normally only takes six months but is now in its 14th. No one doing their job as a member of the board should have been blindsided by an audit they should have known was late and referred to the State Auditor because the private firm couldn't get the required documents.

However, if it's true that not a single one of them was informed by Gee of what he erroneously called "minor" problems with the audit, then Gee needs to go - and I wouldn't even wait for the audit to be completed.

Unless the TARTA board takes serious corrective action, I'll stand by my call for all of them to go.

TARTA excuses don't ring true, Gee still to blame

By now, most people are aware that the Toledo Area Regional Transit Authority, TARTA, has "unauditable" books for 2010. I've called for all the politically appointed board members to be replaced (except the new Sylvania Township rep).

TARTA General Manager James Gee, who should have been replaced after illegally spending taxpayer monies on the levy campaign, has presented several excuses for the "unauditable" finding.

These poorly-presented excuses do not ring true - and certainly don't account for the finding from the State Auditor.

His first response was that the missing audit items were "minor." However, in looking at the list of items the State Auditor ordered him to produce, you can see they are clearly NOT minor.

Gee's other excuse is that they installed a new computer system. Having installed a major computer system as Clerk of Toledo Municipal Court, as well as overseen the transition of Lucas County to a new ERP system, I know such a switch should never result in "unauditable" books.

The Clerk's computer system wasn't just my office, but was part of a complete replacement of individual systems in the Toledo Police Department, Clerk of Court, Toledo Municipal Judges, Lucas County Sheriff's Department Correction Center (county jail) and CCNO - the Corrections Center of Northwest Ohio. Not only did we replace each of the systems in these agencies, we merged them into a single overall system that shared data and information across jurisdictions, resulting in the elimination of duplicate entries, etc. Each of these systems kept records for the agencies as well as financial data, including much more complicated financial records that what TARTA has to deal with.

None of the agencies participating the criminal justice computer replacement were unable to complete their audits like TARTA.

If, as Gee claims, the switch to a new computer system is to blame, then it is his administration and oversight, as well as his lack of planning and anticipation of needs, etc... that caused the State Auditor finding - not the computer system itself.

It is his leadership of the transition and/or the staff that is fully at fault for not adequately handling the installation of a new computer system in a manner than ensures the accountability of the agency to the public for the funds they are receiving and expending.

So even if the "unauditable" finding is partially due to a new computer system, he is still the one to blame for not making sure the agency could function throughout the transition.

His other excuse was that there was new staff in the financial office.

He obviously hired the staff, so why did he hire people who can't produce such basics audit items as a list of contracts - new computer system or not? And why would he hire new staff as he was embarking upon a computer transition?

Even if 'new staff' is partially to blame for the "unauditable" finding, it is still his responsibility as General Manager to hire the right people and ensure they are properly trained so that an audit can be completed.

Again, he is to blame.

His last excuse is that he had trouble scheduling meetings with the private accounting firm, Clifton Gunderson, who was hired to do the audit.

Talk about lame. In a full year, with today's technology, you couldn't get a meeting date???

This certainly doesn't sound valid. Clifton Gunderson is a well-respected national firm that has wide experience in doing public audits. From their website:

Clifton Gunderson is registered with the Public Company Auditor Oversight Board (PCAOB) and is a member of the Audit Quality Center of the American Institute of Certified Public Accountants (AICPA), as well as the Government Audit Quality Center and the Employee Benefit Plan Audit Quality Center. Our accounting and auditing quality control systems have earned unmodified reports in all of our peer reviews and a clean report from the PCAOB.

Does this really sound like a company that can't schedule a meeting?

Or is it more likely that TARTA - and James Gee, personally - are to blame for his 'lack of meeting' excuse? Besides, it doesn't take a personal meeting to produce the missing documents so an audit can be completed.

So, no matter what lame excuse Gee has presented, he is the General Manager and it was/is his responsibility to have the audit completed. He can try to blame others, but the real fault is in his lack of leadership and oversight.

He needs to go.



* "unauditable" is not an actual word, but is the term the Auditor of State has used for a number of years now to indicate the status of public agencies whose books cannot be audited, for one reason or another.

TARTA missing audit items not 'minor'

In response to the declaration by the Ohio Auditor of State that TARTA is "unauditable" for the 2010 fiscal year, James Gee told the local daily that the missing items were “a list of minor details.”

So I emailed the auditor's office to find out what was missing.

Their letter reads, in part:

To Ms. Stacey Clink and Mr. James Gee:

As part of our regular audit of the Toledo Area Regional Transit Authority for the period January 1, 2010 through December 31, 2010, we have determined that the condition of your financial records is not adequate to finish our audit. The IPA firm completing the audit has been unable to obtain the information in the attachments to this letter.

Consequently, we consider the financial records unauditable pursuant to Ohio Rev. Code Section 117.41.

Here are the items listed in the attachment referenced:

Cash and Cash Equivalents

• Request copies of the following checks:

 Huntington a/c 9902 (on Dec bank rec)
 Support of deposit in transit for $33,266.71

• Request details for PNC error

Accounts Receivable

• Support of A/R Federal Oper Assist account

Prepaid

• Trapeze prepaids

Fixed Assets

• FA2- Current year additions detail (need invoices for any significant additions)
• FA3 - Current year disposal detail (need check copy/support for any significant proceeds received)
• Requested support for significant CIP additions
• FA4 - Gain / loss on disposal detail
• Need responses to tax department questions

Accrued Liabilities

• Copy of AL16 for adjustment noted in health care accrual calculation which caused adjustment to be off $62,000

Miscellaneous

• Provide G/L detail for accounts 1380-000, 3020-000 and 3200-000.
• MC8 - Most recent (2011) internal Balance Sheet and Income Statement

Ohio Revised Code

• OR4 - Certificate for total amount from all sources available for 2009 and 2010.
• OR7 - Do-not-exceed certificate
• OR8 - Amending appropriation resolution for expenditures
• List of contracts over $25,000
• Any contracts > $50k. Need corresponding RFPs

Single Audit

• Disbursement Testing Selections. Sample was sent by email on 5/13/11. File was titled “Grants Disbursement Selection”. Requesting P.O.’s, invoices, and copies of cleared checks
• DBE Memos for 2010
• SA11 - Disposals that were purchased with federal dollars

Prepaid

• Hylant prepaid

Accounts Receivable

• Proof of subsequent receipt of TMACOG invoices in other accounts receivable

o Nov 09, Jan, Mar & - $21,918
o Nov – $11,166.20
o Dec - $14,065.61

Accounts Payable

• Need requested invoices for sample selected from 2011 check register. - missing grant invoices

Expenses

• Legal fee detail for 2010 invoice
• Explanation for fluctuations in the following accounts:

o 6110-020
o 6145-020
o 6160-020
o 6175-020
o 6185-020

• Need to determine whether holiday and vacation accruals are correct for last week of pay period
• Updated report for claims
• Updated report for litigations

Control testing

• Last page of check registers for requested pay periods

Other

• Completion of disbursement testing on 11/2/11
• Responses to questions and additional requests relating to quarterly narratives

These are NOT minor. It's not 'minor' to be missing your accounts receivable support for your federal operating assistance account.

It's not 'minor' to be unable to produce a listing of your fixed asset purchases and disposals.

It's not 'minor' to be missing your "Most recent (2011) internal Balance Sheet and Income Statement."

It's not 'minor' to be unable to produce - for 13 months! - your listing of contracts over $25,000 and the requests for proposals for all contracts over $50,000.

It's not 'minor' to be missing your list of disposals purchased with federal dollars. In fact, lack of the audit information on the federal items could result in loss of federal income.

It's not 'minor' to be missing details of your legal expenses, details about fluctuations in various accounts, reports for claims and litigation against the agency, or your complete check registers.

No matter what Gee says, these are major items, most of which should be kept on a regular basis or at least should be capable of being produced within a full year of being requested.

How does TARTA not provide a list of their contracts over $25,000? How do they not provide their RFPs for contracts over $50,000? How do they not gather this information in 13 full months????

There is no excuse for such incompetence. A change in personnel and a new computer system cannot be blamed for many of the missing items. It shouldn't take any specialized knowledge to go to your check register (the document used to record checks written) and make a copy of the last page for various pay periods.

I'll say it again: James Gee needs to go and the entire TARTA board needs to be replaced.

Replace all TARTA board members

The Toledo Area Regional Transit Authority is in trouble again with the state auditor - this time because their 2010 fiscal year is "unauditable."

You'll remember last May when a state audit revealed that TARTA spent tax dollars illegally. The auditor issued findings for recovery against James Gee (personally) and TARTA for using public dollars to fund their tax levy campaign.

Now we learn that TARTA has failed to turn over records so their 2010 books can be audited.

A Jan. 20th press release from Dave Yost, State Auditor, says:

As a result of inadequate financial records, Auditor of State Dave Yost placed the Toledo Area Regional Transit Authority (TARTA) on the “unauditable” list.

“Unavailable records leave unanswered questions,” Auditor Yost said. “This delay is deeply troubling.”

During the course of the regular financial audit of TARTA for the period January 1, 2010 through December 31, 2010, the Auditor of State’s office determined that the condition of the authority’s financial records were not adequate to complete the audit. Financial audits are usually completed within six months of the end of the entity’s fiscal year. In a letter to TARTA, the Auditor of State’s office provided a list of records required to complete the audit. For example, the authority must still provide reconciliation information, as well as lists of purchases and disposals of fixed assets.

Within 90 days of the date of the letter, TARTA must revise its financial records and provide the necessary data. Failure to bring records to an auditable condition may result in legal action, including the possibility of the attorney general issuing a subpoena to the comptroller and general manager to explain the condition of records. The attorney general may also file suit to compel the comptroller and general manager to prepare and/or produce the required information.

The Auditor of State’s Local Government Section (LGS) is now available to help TARTA reconstruct their records.

Gee told the local daily paper that the list of missing items is "minor." I've requested from the State Auditor the list as well as the letter and will share them with you upon receipt. We'll see just how 'minor' they are.

My question is why it's taken so long for anyone to know there was a problem? The audit is over six months past the normal completion time.

TARTA is managed by James Gee. But he reports to a board of trustees made up of representatives from the jurisdictions in the TARTA service area - though the board is dominated by Toledoans.

The most current list of board members I could find show these individuals and the jurisdictions they are supposed to be representing:

* James Bohn (President), Sylvania Township
* Lori Brodie, Village of Waterville
* Brian Fitch, City of Toledo
* Francis Frey, City of Maumee
* Bonita Johnson (Vice President), City of Toledo
* Jack Murphy, City of Toledo
* Shelly Papenfuse, City of Toledo
* Steven Pecsenye, City of Toledo
* Tom Ramsdell, City of Sylvania
* Kevin Rantanen, City of Perrysburg
* Harold Salverda, City of Toledo
* Barbara Sperr, City of Toledo
* Anthony Szilagye, City of Rossford
* Dee Talmage, Village of Ottawa Hills
* Robert Vasquez, City of Toledo
* Clifford Wright, City of Toledo

So why haven't any of these board members - who are supposed to be watching out for the best interests of their jurisdiction - bothered to mention to anyone that TARTA was having trouble producing financial records from 2010?

Why haven't these individuals reported back to their jurisdictions that an "unauditable" designation was forthcoming from the State Auditor? Such a determination never comes as a surprise, as it requires extensive communications and coordination before ever being considered, much less issued.

Is there no one on the board who realizes that they are responsible directly to the taxpayers and that the taxpayers should have had some warning of the problems?

Is it possible that they didn't know? If so, it means that they're not doing their job to ask where the 2010 audit report is - and/or it means that James Gee is keeping information from them.

If the latter is true, Gee needs to be removed immediately. But had I been a board member I would have insisted he be removed after being found personally liable for the illegally spent tax dollars.

These board members have failed in their basic duty: oversight of the agency. Furthermore, their failure to share the pending problems with their appointing authority indicates a lack of accountability to the people they're supposed to be representing.

They are placed on the board to ensure that the agency is serving the jurisdictions in a fiscally prudent and responsible manner. When the agency cannot be audited because it cannot produce records, it is certainly not being fiscally prudent nor responsible.

Toledo City Council and the other jurisdictional appointing authorities should call these representatives in at a public meeting to explain themselves - then remove them.

The entire board of trustees needs to be replaced with individuals who are going to be accountable to the taxpayers and who are willing to provide the oversight this agency so desperately lacks.

State Auditor has checked on Toledo's financial condition

According to a letter from Mayor Carty Finkbeiner to members of council, the State Auditor's office has been in touch with the mayor to check on the city's financial situation.

From the letter:

3. The State Auditor's office was in contact with us late last week requesting information on our current financial situation. We explained the plan that had been placed before City Council, and they indicated they would call back after the Tuesday, April 7th council vote to see what action was taken.

However, it is still unknown if Toledo City Council will be taking any action at their committee of the whole meeting tomorrow. Their next regular council meeting is the 14th and tomorrow (the 7th) would be their agenda meeting. They had originally scheduled a special committee of the whole meeting to discuss the mayor's plan to suspend all union contracts for 1 p.m., but it appears that meeting, along with public comment, will begin at 4 p.m. instead.

Also according to the letter, Carty has updated Gov. Ted Strickland's staff about the current situation and his proposed course of action.

The mayor emphasized in the letter that he is only requesting a temporary rollback of the pension pickups and salary. He pointed out that the concessions requested are for a year and that the current and planned negotiations with the unions would continue.

Additionally, the letter states:

Each union has been notified that for severance pay or compensatory time payouts, the employee's pay rate will be frozen at the rate it was on March 30, 2009 and will not be based on any temporary reductions in salary.

This decision is obviously to stem the thought of retirement and to halt the run on payouts of comp time that were being threatened by employees.

The letter: