A Philadelphia task force has corrected nearly $40 million of discrepancies in the city's cash accounts that stemmed largely from duplicate debt service entries.
The panel, led by Philadelphia’s Treasurer Rasheia Johnson and former City Controller Jonathan Saidel, announced last week it has fully reconciled 76 of 77 city bank accounts with reconciliation of the final account slated for early January. The efforts helped whittle the difference between Philadelphia’s city records and its bank accounts to $900,000 from $40 million identified in 2017.
Johnson said the full scope of $40 million discrepancy on Philadelphia’s books was discovered in 2017 by the City Treasurer’s Office and the Accounting Division of Finance with the issue beginning before Mayor Jim Kenney took office in January 2016.
Prior to her appointment by Kenney as city treasurer in January 2016, Johnson worked at Siebert Brandford Shank LLC as senior vice president and head of the firm’s Philadelphia office.
“We came very close to full reconciliation and we will work diligently into the New Year to bring this matter to full closure,” Johnson said in a statement. “I’m pleased with the progress we’ve made, and proud of the safeguards that we’ve instituted to prevent this from happening in the future.”
The city said that identifying duplicate debt service entries made in 2015 and 2016 where only one payment was processed helped accomplish much of the reconciliation. No funds beyond the correct amount were disbursed, according to city officials.
The Reconciliation Task Force has met bi-weekly since June to help to help expedite the process established controls to prevent future cash account discrepancies. The panel included representatives from the Pennsylvania Intergovernmental Cooperation Authority, city council, mayor’s office, Office of the Director of Finance and the Office of the Inspector General.
Prior to the task force’s formation last June, the treasurer’s office retained Philadelphia-based accounting firm Horsey, Buckner & Heffler to assist with the reconciliation effort. The reconciliation issue also came to the forefront in spring 2018 through a
“As a member of City Council, my goal was to bring to light the situation surrounding the issue and to reconcile City errors,” said Domb in a statement. “I commend the mayor’s administration for addressing this issue and creating the Reconciliation Task Force.”
The city said new safeguards have been implemented to prevent future cash account discrepancies that including enhanced internal control policies and improved communications with other departments.
The city treasurer’s office is also boosting staffing with plans for adding two employees and an additional new assistant city treasurer position. Raymond Hale, a former senior director of treasury at Reology Holdings, Inc., was also hired as deputy treasurer for banking and investment to oversee reconciliations and ensure that the city stays up-to-date.
Philadelphia has general obligation bond ratings of A by S&P Global Ratings, A2 by Moody’s Investors Service and A-minus by Fitch Ratings.
