A. Annual Audit
LRCs are one of two types of Community Improvement Corporations under R.C. 1724.01 et seq. R.C. 1724.05 requires Community Improvement Corporations to submit to an annual audit by the Ohio State Auditor in form and content as prescribed in R.C. 117.11. Based on experience with the Cuyahoga County LRC which has undergone two such audits as of this publication, Ohio Auditor personnel embed themselves for a period of 1-3 weeks at the corporate offices for the purpose of conducting the audit.
Once the audit is completed, the Auditor provides the executive director with an informal report and conclusions to which the LRC can respond. The Auditor prepares his final report, makes recommendations and is required to send the report directly to the LRC’s Board of Directors along with an invitation to meet, as a Board, to ask any questions or make any comments to the audit. Once this process is complete, the audit will be made final and adopted by the Auditor as the official audit of the LRC.
B. Financial Report and General Assembly Reports
a. Annual Financial Report
R.C. 1724.05 also requires the LRC to submit an annual “financial report” within 120 days of the close of the preceding fiscal year. The Auditor can authorize extensions, but this should not be assumed. This is a mandatory requirement.
a. Annual Financial Report
When the Act was passed, the General Assembly was aware it was authorizing a new type of corporation with extensive capabilities. As a result, it required that LRCs report to the General Assembly itself during the first year after the filing of Articles of Incorporation. Accordingly, Section 3(B)(1), (B)(2) and 3(C) of S.B. 353, 127th General Assembly require the LRC to submit report to the General Assembly twice: once within 7 months of the filing of the Articles describing the “summary of the corporation’s activities” and once with 13 months of the filing of the Articles describing “summary of the corporation’s activities.” The content of the report is as follows [(Section 3(C)]:
- “(C) Each such report shall set forth, for that six-month or twelve-month period, the following:
- (1) The corporation’s revenue and receipts from any source, itemized as to the source;
- (2) The corporation’s expenses;
- (3) The number of parcels of any real property acquired by the corporation and the manners by which property was acquired;
- (4) The disposition of such real property on the last day of the six-month or twelve-month period;
- (5) The number of parcels of abandoned land against which the corporation requested foreclosure proceedings under sections 323.65 to 323.79 of the Revised Code;
- (6) The value of any tax certificates acquired by the corporation;
- (7) A summary of any nuisance abatement or code enforcement activities;
- (8) The number of employees and officers of the corporation, and compensation paid to officers of the corporation.”
This report is filed with the “Clerk of the House of Representatives, the Clerk of the Senate, the Speaker of the House of Representatives, the President of the Senate, and the leaders of the minority caucus of each chamber.” See: Section 3(D) of S.B. 353, 127th General Assembly.
For a start-up LRC where little or no activity is undertaken in the first 6 months, a copy of a strategic or business plan (or some of the contents there from) may be useful information for the General Assembly Report, and a sample is included herewith.
Section XV Sample Forms