Auditors find $42K in undocumented expenses in Pittsburgh Great Race account
A nonprofit that used a private bank account to collect Richard S. Caliguiri City of Pittsburgh Great Race registration fees and donations spent money with virtually no city oversight, according to an audit by City Controller Michael Lamb's office.
Auditors reviewed account activity from January 2012 through April and found no evidence of wrongdoing or misappropriation by City Source Associates of the South Side, but noted the nonprofit failed to keep adequate records.
City Source Executive Director Bill Harlak could not be reached Friday for comment, but noted in a written response attached to the audit that the account has always passed an annual review by private auditors. “We had no irregularities in our account and have always provided information necessary to rectify any questions or comments by the race director,” Harlak wrote.
Auditors noted the nonprofit mixed funds from various sources in the Great Race account and spent $103,371 on items unrelated to the Great Race. Harlak said the transactions should have been omitted because the money came from private sources.
The audit also reported 33 undocumented transactions totaling $42,482, including $15,761 spent to purchase gift cards.
Harlak wrote that the company could have supplied documentation if given more time to sort through bank statements, deposit slips and canceled checks.
He said six city auditors visited his small office and there wasn't room to sort through years of paperwork.
“There was not enough room to have six people going through records, and we could not get in the conference area to find documents the auditors needed,” he wrote.
In a summary of his auditors' findings, Lamb wrote, “Operating practices were inadequate, thereby increasing the risk of misappropriate and/or fraud to occur and not be detected.”
Mayor Bill Peduto in May ordered the Office of Municipal Investigations to look into spending from two accounts associated with the Great Race, including the City Source account and a city trust fund, after an unidentified city employee reported possible problems.
Money in the two accounts comes from race sponsors, registration fees, private donations and merchandise sales.
City auditors reviewed deposits totaling about $1.8 million and expenditures totaling about $1.5 million from January 2012 through April 2017. City Source made expenditures after receiving authorization in a memo from the Parks Department, but appeared to operate with no other oversight from the department, according to the audit.
Parks Director Jim Griffin declined to comment.
The Pittsburgh Parks and Recreation Department managed the Great Race until this year when Pittsburgh turned it over to the Pittsburgh Marathon. Peduto's office said the private Great Race account was closed in April.
Invoices obtained by the Tribune-Review indicated the parks department spent $343,326 from the trust fund in 2016 and at least 40 percent went for expenses other than the Great Race. Unrelated expenses included a clown for park events, repairs to a city swimming pool and rental of a stump grinder for Frick Park.
City Source is primarily a property maintenance contractor for Pittsburgh and the Pittsburgh Urban Redevelopment Authority, but also acted at the request of the city as a pass-through for Great Race funds. The company provides the same service for Pittsburgh recreation and senior center activity accounts funded exclusively by participants.
Bob Bauder is a tribune-Review staff writer. Reach him at 412-765-2312, firstname.lastname@example.org or via Twitter @bobbauder.