Following an audit that previously uncovered $322,000 in accounting errors, Fort Thomas officials were told that the city’s latest financial review showed no significant issues, as the council continues to weigh the value of a forensic audit.
The Fort Thomas City Council heard its 2024/2025 fiscal year audit review, which came back clean, and discussed the need for a forensic audit at its Jan. 20 meeting. The audit was conducted by Certified Public Accountant and Partner with Erlanger-based Chamberlin Owen, John Chamberlin, who also conducted the 2023/2024 fiscal year audit.
The city sparked controversy last September when LINK nky reported that Fort Thomas had to write off $322,000 as an “error of the past” following an audit, which revealed major accounting issues.
The financial review found that $322,000 was unaccounted for. Although there was no reason to believe it had been misappropriated, it was attributed to bad accounting practices. After interim finance director Linda Chapman was appointed, the city reconciled accounts, corrected transfers, separated cash accounts and brought the general fund cash account within $322,000.
The 2024/2025 audit presented at Tuesday’s meeting, however, was clean.
“This year, we noted no material weaknesses or significant deficiencies in internal control that we’re required to report, and that’s a very good place to be,” Chamberlin said.
He said the previous audit had eight prior-year management comments that Chamberlin thought Fort Thomas should tighten up, and that city management is in the process of addressing all eight items, with some already taken care of.
Fort Thomas Mayor Andy Ellison addressed some of those concerns from the last fiscal year’s audit in his state of the city address he gave on Tuesday evening. Ellison called the audit of the city’s financial statements “the biggest challenge in 2025.”
“This council, staff inherited the problems identified in this audit, which have been going on for years,” he said. “Our old auditor failed to disclose any of these problems; we are committed to fixing these problems identified, most of which have already been fixed, strengthening oversight, and ensuring that our city’s finances are accurate, transparent, and handled with the responsibility that you expect and deserve.”
During his address, Ellison said that the FBI, the Kentucky State Police, and the Kentucky State Auditor’s Office all refused the city’s request to investigate the audit’s issues.
“Chamberlain Owen and Linda Chapman both explained to us that the reason for this was because there was no evidence of fraud,” Ellison said. “There was only evidence of lazy and sloppy bookkeeping that goes back years.”
Due to issues that arose during the 2023/2024 audit, the city is still discussing whether it is financially worthwhile to conduct a forensic audit. Some members of the city council expressed hesitation to proceed with paying for a forensic audit with a price tag of $35,000 annually, when the city has already been advised that there is no evidence of fraud.
What is a forensic audit?
A forensic audit is an in-depth investigation of financial records to uncover fraud, embezzlement, or other financial crimes, unlike a standard audit that focuses on the financial health of an organization.
“We really need to think about this [forensic audit] before we talk about spending that much money to look for something that everybody says isn’t there,” Ellison said.
The city said it is about halfway through the process of determining the cost-benefit of moving forward with the forensic audit. Fort Thomas City Administrator Matt Kremer said that, by next month, the city will likely have a good analysis for the council to consider.