Questions about financial oversight and accountability took center stage during Thursday’s Fort Thomas City Council meeting as officials and residents discussed the findings of a forensic audit.
The special meeting gave city council members and residents an opportunity to question representatives from accounting firm Dean Dorton about the city’s financial discrepancies, years of accounting problems and the oversight failures that allowed them to continue.
“Do we have the financial expertise, both in city administration as well as around the table, that’s going to make sure that we don’t find ourselves in these situations?” resident Tiffany Huber asked.
The forensic audit identified an $847,335 discrepancy between the city’s accounting records and actual general fund cash balance from July 1, 2020 through June 30, 2024. That figure grew from the $322,498 discrepancy identified during an earlier annual audit.
The difference does not mean $847,335 in city money is missing. Rather, the forensic accountants found transactions that were improperly recorded or not recorded in the city’s accounting system.
How Fort Thomas is changing its financial oversight after an $847K accounting discrepancy
“What did we find? Very poor record keeping processes,” said Josh Shilts with Dean Dorton. “There’s just bad accounting going on. What is also troubling is it was brought up, and it wasn’t corrected.”
The firm conducted 11 forensic procedures designed to identify potential fraud and accounting irregularities. Those included examining transactions for fictitious vendors, nonexistent employees, duplicate payments, unusual dollar amounts and questionable journal entries.
“In performing our procedures, we did not identify unauthorized disbursements, nor did we identify any monies that should have been received that weren’t received,” Shilts said.
Fort Thomas Councilmember Brad Fennell questioned why the investigation did not fully reconcile the original discrepancy to zero, particularly when the city had sought to understand how the problem developed.
Shilts explained that identifying and tracing every historical accounting error would require reviewing records much further back, at additional expense. The firm concluded that such work would provide limited benefit compared with addressing the underlying accounting failures.
“I don’t think that helps anyone,” Shilts said. “I think it costs you a lot of money. It’s, you know, where can we get the city and its constituents, all of you, satisfied, and that’s what we focused on.”
Councilmembers also questioned how financial reporting problems could have persisted for years despite previous annual audits.
Earlier audit reports had identified internal control weaknesses dating back more than a decade, but council members said those concerns were not clearly communicated during past presentations.
Fort Thomas Councilmember Eric Strange described the situation as a “complete systemic failure across the board.”
Shilts said elected officials have a responsibility to understand the financial reports they receive and to question information that does not make sense.
“Unfortunately, you have to become financially astute,” Shilts said. “You have a fiduciary responsibility.”
The accountant also suggested periodically changing independent auditing firms, approximately every five years, to bring fresh scrutiny to a government’s financial practices.
Other residents raised questions about how the city will maintain accountability and make financial information more accessible.
Sharon MacKnight called for more financial information to be made publicly available, including quarterly reports and documentation showing that bank accounts have been reconciled.
Residents also urged officials to establish a stronger culture of financial accountability rather than relying solely on new procedures.
“There needs to be a culture of excellence up here in city hall,” resident Peggy Maggio said.
