External Auditor’s “Management Letter,” for FY 2025

Tonight (10.19.26) I am reporting about another matter resulting from the FY2025 Financial Statement Audit of the City.

I was able to finally obtain a copy of the external auditor’s most recent “Management Letter,” which covers Fiscal Year 2025.

The purpose of the external auditor’s Management Letter is to communicate to the Mayor and City Council compliance and internal control problems it identified during the course of their audit, that in their opinion, did not rise to the level of a “Significant Deficiency,” or “Material Weakness.” But nonetheless required reporting.

I was expecting to see the Management Letter included in the City’s Annual Comprehensive Financial Report (ACFR). I did not find it there. Apparently, in Ohio, the Management Letter goes to the Mayor and City Council separately, not as part of the ACFR. I found that the public has to request the Management Letter directly from the Auditor of State. So that is what I did.

I have posted the letter above. It shows the following:

Findings concerning the City’s IT Security posture have been redacted, which is appropriate. In order to protect the city from a ransom-ware attack, for example, we do not want details about our IT systems made public.
Findings that the City paid a $353,000 IRS penalty in FY25 based on an unspecified failure in the City’s process for withholding and remitting federal payroll taxes.
Findings that the City is not complying with requirements related to employee fraud awareness training.
Findings that the auditor tested a sample of ten (10) city officials who are required by the City Charter to file financial disclosures every year by April 15^th. The Auditor found that 100% of their sample failed to comply with the requirement. It is not reported how many of the sample were elected officials. That should have triggered further testing but it is not reported whether that occurred.

The City passed an ordinance on May 14, 2025 authorizing the payment of the IRS penalty by a 9-0 vote. The Council passed it as an emergency matter and voted to suspend the 3 readings. The funds for the IRS penalty was included in item 202500945, the “Final Budget Adjustment for FY2025, which made $23.9 million in adjustments, including $400,000 for the IRS penalty. In other words, the penalty was buried among other adjustments. No word from any city council members about the penalty.

Remarkedly, the City’s Internal Auditor issued an audit report in September 2026, just a few weeks ago, about federal witholding taxes and made no mention of the $353,000 IRS penalty or any details about the obvious breakdowns in the process.

The management letter indicates that the city has taken steps to fix the problem. Since the city has not disclosed any further details, I will see what I can find out and let you know.