Wednesday, April 23, 2003

Florence finances now in order

City changed way money handled after huge theft

By Brenna R. Kelly
The Cincinnati Enquirer

FLORENCE - The city's finances are now clean, according to an audit conducted by the firm that last year uncovered the theft of nearly $3 million.

The 2002 audit by Rankin, Rankin and Co., presented to City Council on Tuesday night, gave the city an "unqualified'' opinion. That means the audit found the city's financial statements are in order

"The fact that we got an unqualified opinion is major," said Mayor Diane Whalen. "It's very important to the city."

In the wake of the theft by former Finance Director Ron Epling, the audit for the fiscal year ending June 30, 2002, could have left the city with a "qualified'' opinion, meaning that the city's records could not accurately depict its financial status.

A qualified opinion could also have given the city a poor bond rating.

But the city's new finance director, Linda Chapman, who uncovered Epling's theft while auditing the city last year as a Rankin, Rankin and Co. employee, was able to determine that Epling stole $785,000 in 2002.

"She identified that amount and where the money would have gone had it been properly recorded," said Dick Rankin, senior partner at Rankin, Rankin and Co., who presented the audit to council.

In just over a month on the job, Chapman has changed the way the city handles money to keep a theft like her predecessor's from happening again.

Epling was accused of depositing checks written to the city's capital improvements fund into a personal bank account he had titled "Florence Capital Improvements." He covered his tracks by paying back the real Florence capital improvements fund by diverting checks written to the city for taxes, licenses and other fees.

Epling got the checks by opening the mail himself and overriding the city's computer system, Chapman said.

"A lot of times checks received in the mail would end up in Ron's office, and it was easy access," she said.

To stop that, one person has been assigned to open all the mail at the counter, logging in every check and stamping it "for deposit only."

The computer system has also been changed so that deposits cannot be changed. Epling also took deposits to the bank personally; that will now be done by courier.

"What we are doing is addressing a problem that has fallen in our laps and doing our absolute best to rectify it," Whalen said.

Epling pleaded guilty in February to 35 counts of theft totaling $2.8 million. Last month he was sentenced to 16 years in state prison.

Investigators believe Epling probably stole closer to $4.9 million. Epling worked for the city for 15 years before his scheme was discovered.

Whalen said the city hopes to recoup some of the stolen money from its bonding companies and from Epling's assets.

"It's an unfortunate bump in the road, one that we want very much to see through to the end and to move to beyond because there is a tremendous amount of good things happening in the city of Florence," she said.

The audit reflected some of those good things.

For fiscal year 2002, Florence had $18.3 million in operating revenue - a 14 percent increase over 2001.

In eight years, the city's operating revenue has grown 87 percent, reflecting the enormous growth in population and business.

That helps explain how the city did not notice the money that Epling was stealing, Whalen said.

"It's easy to see how the theft could be missed when you have a growing trend like that," Whalen said.

Tax revenues for 2002 increased $1.5 million over 2001, with property taxes bringing in $4.2 million and payroll taxes bringing in $6.6 million.


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