Deputy Policy Editor, OpenTheBooks.com
Last year, the City of Baltimore didn’t follow rules required to use federal funds, record its payroll, track water usage, and isn’t prepared for the next ransomware attack, the city’s FY2021 Fiscal Report Card found.
Some city agencies couldn’t provide employee timesheets and other payroll documentation to make sure they were complying with internal controls, according to an audit of fiscal year 2021, July 1, 2020 through June 30, 2021.
The City of Baltimore spent at least $846 million on employee salaries in 2021.
Different departments have different time-keeping systems, which led to errors, and the timekeeping records weren’t able to show the time charged to federal programs, the report found.
Tracking Federal Grants
It also found that some agencies couldn’t show that they followed federal grant guidance for monitoring grants recipients.
The audit found cases where the amounts for federal grants didn’t match what the general ledger showed, and the agencies didn’t properly investigate the discrepancies to make sure grant recipients were using the funds.
In one particular grant program, 17 out of 40 expenditure selections showed that “service dates” happened outside of the period of time indicated in the grant award, according to the audit.
All of those findings were considered “significant deficiencies,” in the audit.
The City of Baltimore received $77 million in federal grants in fiscal year 2021, according to federal spending records. It was awarded for programs including section 8 rental housing assistance for low-income people, Covid-19 response, HIV prevention and treatment, its Head Start program, which provides free pre-K education for children ages 3-5 years, and more.
City agencies didn’t have formal procedures and accountability, so the city couldn’t establish accurate balances of how much in grants it received, the audit found.
Because of bad record keeping, “the city had significant post year-end adjustments to its fiscal year 2021 financial statements,” the report found.
New Water Meters
Other findings included that many water utility accounts haven’t been billed since a new meter system was implemented, and others have been billed inconsistently. This makes it impossible to know accurate water and wastewater utilities revenue and accounts receivable balances without manually calculating adjustments, which could cause larger errors.
Vulnerable To Ransomware Attacks
Finally, the report found “severe/critical/high risk legacy vulnerabilities” in information technology management systems that hadn’t been fixed, which leaves the city open to having its data lost or stolen.
Two ransomware attacks against the City of Baltimore 911 dispatch system in 2018 and its entire computer system in May 2019 have cost tens of millions of dollars in remediation and on premiums for ransomware insurance.
“We conduct audits to support and improve performance and accountability,” Comptroller Bill Henry said in a press release. “Many of these findings were captured in previous reports and are being worked on daily. Bottom line – I want to assure residents and all of our constituents that we will be relentless in holding agencies accountable in building a stronger, more reliable financial system."
The city now uses Workday for financial management and human resources, phasing it into city operations beginning in early 2021, the comptroller’s office said.
Its gradual roll out is helping city agencies “transition from numerous stand-alone systems and spreadsheets into one, unified system has and will continue to provide opportunities for increased accuracy, accountability and unprecedented communication and collaboration between City agencies,” the office said.
City agencies are also revising and enhancing grants management policies to address issues.
“These corrective actions are our top priority,” Finance Director Michael Moiseyev said in a statement. “Workday was long overdue, and I know that its implementation, along with our corrective action plan, will be positively reflected in the FY23 report.”
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