A new audit examining VisitPITTSBURGH is raising serious questions about transparency in the organization.
The Allegheny County Controller's Office accuses the area's main tourism organization of flawed financial management and placing too little emphasis on some of the area's biggest venues.
"When an agency receives over 90 percent of its funding from tax dollars, it needs to be held to a higher standard than other non-profits," said Controller Corey O'Connor. "Our auditors have issued findings and recommendations that would improve transparency and reporting standards to the public."
The audit reported eight main findings:
- VisitPITTSBURGH lacks transparency regarding staff compensation
- Operators of large event venues need representation on VisitPITTSBURGH's Board of Directors
- Hotel tax dollars need to be restricted and accounted for separately
- The allocation of personnel resources appear to have adversely impacted the number of locally hosted events
- The reserve amounts being maintained by VisitPITTSBURGH are not reasonable
- The improper recording of event subsidy liabilities has led to a misleading financial presentation
- A greater focus on cost control is warranted
- The investment strategy being used needs to account for market volatility
VisitPITTSBURGH is disputing many of the audit's findings. President and CEO Jerad Bacher feels the audit was presented to them as a performance review, but excludes many important aspects of their performance.
"Even though the report found no irregularities or unethical business practices, within the organization, what the report did include was a lot of factual inaccuracies, omitted data and language that is extremely misleading."
Many of the audit's findings revolve around VisitPITTSBURGH's accounting practices, including its methods surrounding hotel tax.
"Despite the funds received from the hotel tax being restricted by law to certain purposes, VisitPITTSBURGH has not recorded these as restricted funds, and has commingled public and private funds in the same bank account," said O'Connor's office. "Consequently, the agency cannot identify which expenditures are made using public or private funds."
However, Bacher claims VisitPITTSBURGH's practices meet accounting standards.
"These processes have been in place for well over 20 years, have been audited by several external CPA firms, as well as been audited by the county two or three different times," he said.
The audit also found VisitPITTSBURGH focuses too much on leisure events and potentially neglects opportunities for business and sporting events. It points to the composition of its Board of Directors and its sales and marketing staff as evidence.
No representatives from the Steelers, Penguins, Pirates or the Sports and Exhibition Authority sit on VisitPITTSBURGH's board. The audit also reported the organization's leisure tourism and marketing unit had 14 staffed positions at the close of 2022. Three salespeople worked to secure business events, while two worked to secure sports events.
"This may have contributed to fewer than 10 percent of events attracted by VisitPITTSBURGH from 2017 through 2022 being held at the David L. Lawrence Convention Center, as the agency's record shows, the County Controller's Office said."
Bacher believes the audit neglected to mention VisitPITTSBURGH's successes and denied that their personnel structure has negatively impacted the number of events held in the area.
"This organization, plus our entire community, went through some hard, hard times, the hardest in modern history," he said, referring to the COVID-19 pandemic. "Now to have this kind of behavior, these kind of activities going on just at the pinnacle when we're starting to see strong recovery is absolutely counterproductive."
He believes the audit was a political move by State Sen. Wayne Fontana (D-Brookline). Fontana called for the audit last year and is the chairman of the Sports and Exhibition Authority.
"He feels like that is an organization that he can fold into the Sports and Exhibition Authority as a way of solving some of the issues that the SEA has," Bacher said.
In a statement Thursday, Fontana said the audit confirmed his concerns about VisitPITTSBURGH.
"The audit verifies that VisitPittsburgh is not transparent in its use of public tax dollars, disregards basic accounting principles, overspends thousands of dollars on its operations, and is blatantly defiant to any kind of oversight," he wrote on his website. "The audit also exposes the lack of a coherent and organized strategy to bring conventions and sporting events to the city and region—an egregious failure in the competitive post-pandemic tourism economy."
Fontana called for increased government oversight for VisitPITTSBURGH.