Today’s Sun article takes written statements from the City Auditor out of context and ignores relevant information provided to the newspaper by the City Treasurer. Of even greater concern, it fails to accurately report on the City’s internal accounting procedures. This statement is intended to provide accurate information to the public on this matter.
In April 2012, the City Auditor and City Treasurer met with City parking director, Charles Carney and Central Parking personnel to review the consolidation of bank accounts. Shortly before the meeting, the City Treasurer discovered duplicate deposits reported when reconciling to the bank statements. Duplicate deposits are an over-reporting of funds deposited. This practice was not related to the collection of monies from kiosks, but rather, a collection of monies from the parking garage receipts. In short, what was discovered was nothing more than a clerical error of reporting the same figures twice. Obviously, what was identified was in no way an indication of any serious accounting weakness. It was an issue identified and corrected.
As a result of the April meeting, the Auditor and the Treasurer discovered a practice within the parking dept of utilizing bank deposit statements for the purpose of reconciliation with meter deposits. This practice, which is not uncommon, originated and was related to reporting methods associated with coin operated machines. What was therefore identified by the Auditor and the Treasurer was an older but accepted practice and the steps taken by the Auditor and the Treasurer were the initial steps to transition the parking department from an older system to a more modern accounting system. This more modern accounting system would utilize increased reporting capabilities associated with the kiosks which have been replacing traditional meters. As with the duplicate reporting, this practice was in no way related to, nor indicative of, the more serious issue of missing funds.
Even before these issues were identified, the city’s parking department was chosen by the Auditor as one of the departments for an in-depth internal audit. The Auditor selected the parking department because of its size and the amount of cash it handles – not because of any suspected missing funds.
The City’s internal investigation remains ongoing. However, in light of today’s Lowell Sun article, certain parts of the investigation should be disclosed to maintain the integrity of our internal accounting procedures. At this point, it has already been publicly revealed that the former parking director failed to disclose both the existence of a significant theft of City funds as well as his unauthorized restitution agreement. What should also be known is that he failed to disclose the results of the accounting software which identified this theft. Unknown to either the Treasurer or anyone else within the City’s administration, a breakdown occurred within the parking department relating to the reconciliation of kiosk reports with deposit tickets. It appears that, although the kiosk reports clearly identified missing funds on several occasions, parking department personnel failed to report the discrepancy between the kiosk reports and the deposit tickets to the City Treasurer. Instead, the parking department sent to the Treasurer their turn-ins – the monies that they deposited – not the amounts that were actually received in the kiosks. The Treasurer, in turn, reconciled the turn-ins to the bank statements, i.e., the deposits made, and found no discrepancies. This type of breakdown could only be revealed as the result of a complete internal audit in which the original source documents would have been made available and reviewed by our outside auditors. Again, the comprehensive audit of the parking department for FY2012 was scheduled to coincide with the FY2012 city-wide audit.
Lack of knowledge of the theft was not the result of an accounting weakness, but the result of willful deception. In this case, the City administration specifically selected the kiosk system and kiosk software to prevent this type of theft from occurring. What was not immediately preventable by the City was the deliberate and concealed misuse of the kiosk system and its related software. While these actions would not have continued indefinitely, their existence only just came to light as a result of a “concerned citizen.”
We can state with assurance that this theft would have ultimately been identified by the comprehensive departmental audit which would have taken place sometime this fall but is now currently underway.
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Bernard F. Lynch|City Manager
Office of the City Manager