A nonprofit sponsored by the city of Minneapolis to promote walking, biking, ridesharing and transit may have been falsifying accounts and misdirecting funds, according to an audit report made public at City Hall Tuesday.

The city's audit committee heard the results of an investigation launched after a former employee leveled allegations of mismanagement at Move Minneapolis, based downtown on the Nicollet Mall.

City audit director Will Tetsell went through a list of what he described as suspected fraud and employee misconduct, citing kickbacks, "double dipping" and altered invoices, some of them for what he called "fictitious businesses." He said a laptop thought to have held some of the organization's records had also been scrubbed of nearly 1,200 files.

Move Minneapolis, also known as the Downtown Minneapolis Transportation Management Organization or DMTMO, is funded largely by federal money, including Congestion Mitigation and Air Quality, or CMAQ, grants. The organization's mission is to encourage people to find alternatives to single-occupancy cars, such as carpools, bikes, walking and mass transit. It was chartered by the City Council back in 1991 and has gone by other names in the past, like Commuter Connection. City staff said two City Council members and a representative from the office of Mayor Betsy Hodges serve on the board now.

Tina Hoye, chair of the organization's board, said the executive director of Move Minneapolis, Dan MacLaughlin, had been placed on unpaid leave.

"While we are deeply concerned that the audit committee found that the TMO is not in full compliance with all of the requirements of our CMAQ grant, we are reassured that the funds from the grant were spent in ways that support our mission," Hoye said in a statement. "We remain committed to promoting a sustainable transit and transportation system that supports a growing and vital downtown Minneapolis."

Tetsell told the audit committee that the terms of the grant funding required a 20 percent local match. But Tetsell said the organization's books didn't reflect efforts to raise local funding, and cast doubt on the matching funds the organization was eligible for. Tetsell told the audit committee that the audit indicated the DMTMO "overbilled the CMAQ grant by at least $50,000."

The audit also found that the DMTMO distributed a bonus to employees every year, despite the fact that it was a nonprofit.

"There was this matter of 'profit sharing,' an extra monetary bonus, if you will, into their 401k, and this was above the typical 401k match that was in their employment contracts," Tetsell told the audit committee. "There is no indication that this was for extra work."

Audit committee members questioned the practice. "I've never, ever heard of profit sharing in a nonprofit," said Ward 13 City Council member Linea Palmisano, who chairs the committee.

Tetsell also said there were discrepancies in the payroll records, particularly regarding vacation and sick time and employees coming in and leaving early.

"I find this quite alarming," said audit committee member David Fisher.

The audit is being forwarded to the Minneapolis City Council and the Metropolitan Council for further action. The information used to complete the report has been turned over to the board of Move Minneapolis. Palmisano also said the results would be turned over to federal authorities, possibly opening the door to a federal investigation.

Palmisano said she hoped the findings were a sign of things to come, after the city hired a new director of internal audits in 2014 and responded to other matters, such as the accusations leveled against Community Action Minneapolis two years ago. Two Minneapolis City Council members had been named to the Community Action board when a state audit found hundreds of thousands of dollars in questionable spending in 2014. Community Action subsequently folded and its former director is facing federal fraud charges.

"We're committed to making sure that organizations that work with the city are held accountable for honorable and lawful practices, Palmisano said during the audit committee meeting, adding that she wants the city to boost its internal audit capacity. "We intend to continue investigating these types of activities."

Palmisano also said she wanted the city to dissolve legal ties to the DMTMO.

"It is not our intention for this organization to fail, but the city deserves better," she said.