Meginness confident city can recover, move on from audit mess
City of Marion Auditor Miranda Meginness said there's much work left to do, but she is confident she and her staff can overcome the issues created by shoddy bookkeeping of a previous administration, clean up the city's financial records, and incorporate sound policies and effective procedures moving forward.
An Ohio Auditor of State report about the 2020 financial audit released in May 2022 detailed a variety of issues within the auditor's office, the most prominent of which was a failure to reconcile bank records. The report included findings for recovery against the two previous Marion auditors.
After receiving the state auditor's report, Meginness began the process of addressing the problems. The city hired an outside firm (Charles Harris and Associates) to conduct the 2021 financial audit and another firm (Veritas Solutions Group) to conduct a forensic audit to clean up the bank-to-book reconciliations and help facilitate the completion of the 2021 audit.
The most recent issue to hit the city was notification from S&P Global Ratings that the company had revoked the city's bond rating due to various delays in receiving financial reports from the city. Meginness delivered that bad news to Marion City Council during a committee meeting on April 17.
Revocation of the bond rating adversely affects the city's ability to borrow money for capital projects and its chances of qualifying for federal grant funding. Both the Marion Police Department and Marion Fire Department depend heavily on grant funding each year.
Meginness said she spoke with a representative of S&P Global Ratings last week to find out what steps the city needs to take to have its bond rating restored. While there is no "bullet point checklist" of what to do, she said the representative told her that a completed audit is needed to begin the application process. She said the city's history with S&P could be beneficial is reacquiring the bond rating.
"A withdrawal (of the bond rating) obviously looks bad, but if we decide to go back with S&P, the good news is they could include notes (in our application) that describe to potential investors that we had a withdrawal of the bond rating, but it had nothing to do with financial issues, it had everything to do with reporting problems," Meginness explained. "They can explain the reasons on our behalf and include that in their report (to potential investors). It's uncharted territory really because there's not a whole lot of guidance from anyone on what to do."
Representatives of Veritas Solutions Group, which is conducting the forensic audit of the city's finances, informed Meginness that they are close to completing their work, which will then allow Charles Harris and Associates to complete the 2021 financial audit, she explained. Veritas is also developing a sound bank reconciliation procedure, which Meginness said she and her staff will implement and maintain.
"As long as (the new bank reconciliation process) is maintained, there should be very few problems as far as this is concerned," she said.
Meginness said representatives of the firm of Clark Schaeffer Hackett Business Advisors, which the city has contracted with to perform the city's financial audits for fiscal years 2022, 2023, and 2024, have told her they could begin the 2022 financial audit as early as June if there are no further delays completing the 2021 audit. The audit must be filed with the Federal Audit Clearinghouse by Sept. 30.
Meginness said she has taken the "corrective action plan" from the Ohio Auditor of State that was part of the 2020 audit report and made it part of her office's regular policy. The corrective action plan included the following recommendations:
implementing a monthly practice of bank-to-book reconciliations
implementing a monthly comparison of the appropriations done to the estimated resources available and limitappropriations as necessary
implementing a monthly budget review of every department, and make necessary appropriations at the end ofthe fiscal year to cover additional expenditures
"Everything that we had listed on the corrective action plan has either already been implemented or it's in the process of being implemented," Meginness said. "The relationships that we have formed with the other city departments are a key component to being in a fiscal office. (The auditor's office) is such a vital part of the city (government) and how it functions that if we have bad relationships between the fiscal office and other departments, it's going to cause problems. I like to think that I'm on pretty good terms with most of the department heads and directors. We have communications with them all the time."
Daniel S. Wigton, senior vice president and branch manager of Stifel Financial Corp.'s Marion office, said in his 40-plus years of experience in the investment industry he had never dealt with a municipality or other public entity that had its bond rating revoked. During that time, he worked with about 70 public entities. Earlier in his career, a firm he worked for handled municipal investments for both the City of Marion and Marion County.
Wigton said while the situation Marion finds itself in is serious, he doesn't believe it's a catastrophic long-term issue. He noted that after discussing the situation with Meginness, he is confident that she can lead the auditor's office effectively through this process.
"She is the most transparent person in that position that I've talked to in about 40 years," Wigton said. "She spent a tremendous amount of time with me and also sent me numerous emails and helped me clearly understand what I thought was the situation. She was tremendous and her staff is working extremely hard to get things done and recognizing where the problem was, which was the bank reconciliations. I feel very, very confident in her and her staff."
Wigton also cautioned the citizens of Marion about the importance of electing qualified people to key offices in local government, especially those positions that handle taxpayer dollars.
"I think it's critical we understand as taxpayers who we elect into those offices," he said. "If we elect somebody who does not have the capability to do the job, it doesn't make any difference whether they're Democrat or Republican, we shouldn't elect them. It's up to the taxpayers to be very careful who they elect and make sure that these people know how to do what they need to do in those offices."
City council committee meetings set for May 1
Marion City Council will conduct committee meetings beginning at 6:30 p.m. on Monday, May 1 at City Hall. The finance; airport, lands, and buildings; jobs economic development; and legislation and codes committees are scheduled to meet on Monday evening.
The next regular city council meeting is scheduled at 6:30 p.m. on Monday, May 8 at City Hall. To view the schedules and agendas for regular council meetings and committee meetings, go to the City of Marion website www.marionohio.us.
Email: ecarter@gannett.com | Twitter: @AndrewACCarter
This article originally appeared on Marion Star: Meginness confident city can recover from audit mess
