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Richmond finances criticized

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Richmond officials were unable to match their figures for the city's cash with bank statements for months after the end of fiscal 2007, a confidential memo by the city's outside auditor notes.

The memo, a copy of which was obtained by the Richmond Times-Dispatch, said millions of dollars from different sources of city money either were not recorded or were accounted for in the wrong period.

It also criticized city officials for poor record-keeping of financial transactions, noting that they couldn't document spending on capital projects or the details of complex economic-development deals. The memo did not identify the projects.

The memo, called a management letter, was prepared by the accounting firm KPMG LLP, which certified the city's annual financial report was accurate -- what accountants call an "unqualified opinion."

"The city received an unqualified audit opinion. At the end of the day, that's what's really important," Chief Financial Officer Harry Black said.

Black said management letters are intended to be private advice to call attention to potential problems. He blamed personnel rules that limit his ability to hire and fire staff and the City Council for not giving him enough resources.

"This is what I inherited," he said. "You can't give me the resources I've got and expect me to do an A-plus job. . . . We know there needs to be improvement, and we're working on it."

The memo noted that:

  • several city accounts, including the payroll, were not reconciled for at least five months after the end of the fiscal year;

  • $2.3 million of deposits into one account either were not recorded or were recorded in the wrong year. A total of $648,200, some of which was deposited as far back as March 2007, still hadn't shown up in the general ledger after eight months;

  • more than $5 million in another account was not recorded in the city's cash account as it should have been.

The city told its auditor that its new policy, as of May, is to reconcile bank accounts within 45 days of a month's end.

City Council President William J. Pantele said the memo is one more sign of trouble, after a series of tough audits that found sloppy management of Richmond's bill-paying, purchasing and vehicle fleet operation.

"It's obvious that there are weaknesses in the financial operation of the city," he said.

Contact David Ress at (804) 649-6051 or dress @timesdispatch.com.

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