CIP Audit Released

by Categorized: Internal Audit Commission, Uncategorized Date:

The city’s internal audit commission has reviewed Hartford’s Capital Improvement Project expenses and found that about $1.6 million may not have been spent appropriately.

Nearly $1 million in employee salaries and about $683,000 designated to cover repairs, supplies and other items were classified as capital improvement costs when in fact they may not be, auditors said.

We’ve written before about concerns raised over the $683,000 in capital expenses (you can view that story here). City treasurer Adam Cloud told council members in October that the $683K should have been classified as operating costs.

Jose Sanchez, Hartford’s director of management and budget, said at the time that the city had already offset $200,000 of the $683,440 in question by securing grants. He said officials would either request a transfer to cover the remainder of the costs or not make the purchases.

With regard to the nearly $1 million for employee salaries, auditors wrote: “Based on reviews and discussions with [bond counsel] … unless there is some mitigating reason for doing so, it would generally not be appropriate to charge LSNI salaries to a CIP account or pay for them with bond proceeds.  … These expenses would have to be reviewed in more detail to determine if they are eligible to be charged and accounted for in this manner.”

They added, however: “We were informed by Finance Department management that it is acceptable to charge salary to a CIP account when an employee works directly on the CIP project.”

One thing that stands out in the report is a caution to the city: “We … noted that actual and planned uses of CIP bond proceeds were not in accordance with federal tax regulations and requirements. As a result, the City of Hartford is at risk of losing the tax exempt status of certain bond issues.”

To read the full report, click here: CIPSpecialReviewMemorandumFinal

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