Philadelphia Made Nearly $1 Billion in Accounting Mistakes Last Year

An internal audit of the city of Philadelphia's finances found there to be $924 million in bookkeeping errors last year.

“Taxpayers deserve more than this. It’s time for the city to treat taxpayer money with the respect that it deserves and government needs to work better,” said City Controller Rebecca Rhynhart in a Tuesday press conference.

Rhynhart took over as controller last year. The elected position is an independent monitor of the city’s financial health.

The city’s audit found two material weaknesses and eight significant deficiencies that are major accounting problems for the city of 1.5 million people.

“Philadelphia has serious issues with its financial management. Compared to the other top ten largest cities, Philadelphia has by far the largest number of reportable internal control findings,” Rhynhart said in a release. “If these deficiencies continue to go unaddressed, this could result in the city’s financial statements being considered an inefficient tool for assessing the city’s financial health. I call on Mayor [James] Kenney to treat these issues with serious urgency and to develop a comprehensive plan with a detailed timeline to address each finding over the next year.”

Another separate accounting error that has occurred in the city is an unaccounted-for $28 and $33 million due to unreconciled cash accounts dating back to fiscal year 2015. Other accounts have not been reconciled since 2010. Rhynhart’s office said that it would launch an investigation into the unaccounted-for cash.

In a statement to Newsweek, Kenney's office said that the mayor had already begun addressing the fiscal issues. 

“Mayor Kenney understands that this is an urgent matter of concern to all taxpayers. His administration was the first to highlight these issues and build a plan to address them,” his office noted.“Long before the controller highlighted this matter, Treasurer Rasheia Johnson began significant, concerted efforts to complete all outstanding reconciliations. We are confident that the funds will be fully accounted for as we work through that process.”

Kenney’s office has announced a Reconciliation Task Force to deal with some of the city’s accounting issues and has invited Rhynhart to be a part of it.

“The Task Force will ensure that efforts are not duplicated, taxpayer funds are used efficiently, and this matter is resolved quickly and accurately,” said the mayor’s office. “We obviously wish this could be fixed overnight, but a problem like this requires time to be fully resolved responsibly. We look forward to completing this process by year’s end.”

Rhynhart was formerly a member of Kenney’s administration and the prior administration of Michael Nutter, serving various roles including the city’s budget director and chief administrative officer. 

The city’s finance director, Rob Dubow, has said that the city has hired additional accountants and an outside accounting firm to help reconcile the city’s main bank account and investigate the missing accounting variance.

“We are putting a lot of resources into dealing with the issue — we hired an outside consultant, we hired additional staff,” Dubow told The Philadelphia Inquirer and Daily News. “We have a plan to correct the issue and to make sure it never happens again. It’s going to take a little time because it’s a big issue. But it is a high priority for us.”

This story has been updated to include statements from the mayor's office and to clarify the nature of the unaccounted-for $28 to $33 million. 

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