The Office of the City Controller last week released the Report on Internal Control and On Compliance and Other Matters Fiscal Year 2018, finding that the city had two material weaknesses and seven significant deficiencies in its internal control over financial reporting.
“Year after year, the city has multiple serious deficiencies in its internal controls over financial reporting and year after year, they take minimal action to address them. While progress was made on the treasurer’s reconciliation issues, the city has not made a concerted effort to address most of the other findings,” said City Controller Rebecca Rhynhart. “The City of Philadelphia continues to be the worst among the top 10 cities as it relates to internal controls. I’m urging the finance director and the mayor to treat these findings with the urgency they deserve so that taxpayer money is not at risk.”
Over the course of the fiscal year, only one of the 10 findings was resolved completely, according to Rhynhart. Progress was also made on the treasurer’s office reconciliation procedures.
For FY2018, material weaknesses were inadequate staffing levels, lack of technological investment, insufficient oversight and untimely and inaccurate preparation of the Schedule of Expenditures of Federal Awards.
There have been improvements in the treasurer’s office bank reconciliations procedures. In last year’s report, it was identified as a material weakness and resulted in a $33.3 million variance (as of June 30, 2017). Over the course of the fiscal year, the treasurer’s office took steps to address the reconciliation issues and reduce the unknown variance. Improvements were made, however, reconciliation issues persist. The remaining variance, $529,000 (as of June 30, 2018), has not yet been identified, an additional $13.5 million in bank receipts remain unmatched, and appropriate supporting documentation was not provided to the audit staff to verify the reconciliation process was performed properly for four of the long unreconciled accounts. ••