FLINT, Mich. (Michigan News Source) – The city of Flint lacked effective financial oversight, violated state law and didn’t distribute all the money it collected on behalf of other entities and when it did, ended up overpaying because of that lack of oversight, according to an audit of its finances.

Counting the cost.

The Rehmann accounting firm was the city’s contracted auditor. Earlier this year, the city of Flint approved paying Rehmann $289,000 to conduct its fiscal year 2024 audit. The city council also agreed to pay Rehmann up to $306,000 for its FY 2025 audit.

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Flint was about a year late filing the report. This report was for the 2023-24 fiscal year that ended June 30, 2024. The city filed that report on Dec. 22, 2025.

The auditors found “material weakness” in the accounting oversight.

Instances cited by the auditor.

The city was ineffective in oversight of how its grants were handled. “This issue caused significant discrepancies in financial statements, disrupted cash flow, restricted funds used to fund other potentially unallowable purposes, and increased the risk of noncompliance with grant terms,” the report stated. “The untimely grant draw requests were primarily caused by the lack of a robust grant management system, insufficient staff training, poor communication between departments, administrative overload, and inefficient processes. .. These factors collectively led to more than one year delays in requesting funds, impacting City cashflow, financial reporting accuracy and compliance with grant terms.”

One employee – the billing supervisor – had complete control of financial statements when dealing with utility customers. “Ideally, no single individual should ever be able to authorize a transaction, record the transaction in the accounting records, and maintain custody of the assets resulting from the transaction,” the report stated.

The city did not distribute $1.1 million in taxes it collected on behalf of other local units of government, and when it did distribute some of those taxes, it overpaid some local units by another $458,560.

“This condition appears to be the result of City not implementing proper internal controls to ensure the timely and appropriate disbursement of property taxes collected on behalf of other local units of government,” the auditor stated. “As a result of this condition, the City is in violation of Public Act 206 of 1893 and is also exposed to an increased risk related to the overpayments.”

Cyber attack readiness.

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The auditor also found the city didn’t have a system in place in case of a disaster event or cyber attack.

The city of Flint’s mayor office didn’t respond to an email seeking comment.