Miami skirted financial integrity rules -- enacted in the wake of City Hall's 1990s-era financial meltdown -- by using ``inaccurate and misleading'' budgetary practices as it scrambled to fill budget holes, the city's internal auditor has concluded.

The city's audit comes amid an inquiry by the Miami office of the U.S. Securities and Exchange Commission, The Miami Herald has learned. The SEC is examining whether Miami issued public bonds based on questionable representations of the city's true financial conditions. So far the agency has not reported its findings.

The Nov. 17 city audit, prepared by Auditor General Victor Igwe, questions how forthcoming Miami's in-house financial team has been with elected officials and the public as the city grappled with steep budget holes and rising pensions in recent years. At one point, the audit faults the city's budget director for delaying and stonewalling the review.

``This audit is very serious,'' said newly elected Miami Mayor Tomás Regalado, who has asked Igwe to examine other city departments as well. ``We're finding a minefield in every corner of city government.''

Igwe's audit and the SEC's scrutiny arrive at a critical time at City Hall. Two commissioners were removed from office this month amid criminal probes, leaving the board with barely enough commissioners -- three -- for a quorum. Wednesday, the commission will hold a special meeting to decide whether to set special elections for those vacant seats.

The new commission, once filled, must instantly confront the financial problems identified by Igwe:

• Miami boosted its rainy-day fund by raiding capital-improvements money it called ```unused'' -- even though the money was desperately needed for construction projects.

• City administrators repeatedly used reserve funds to balance the budget, violating a rule that calls for the annual budget to be ``structurally balanced.''

• One sub-category of reserve monies is $289,510 lower than the city's internal guidelines require, and the Parks and Recreation Department exceeded its budgetary authority by $531,440.

• Impact fees, meant to offset the strain that new development places on streets, roads and parks, were instead used to shore up the city's budget reserves.

``You can't do that,'' Miami-Dade County Commissioner Carlos Gimenez, a former Miami city manager. ``Obviously the problem was there was a structural problem . . . their expenses were higher than their income. You've got to fix that first.''

Miami Budget Director Michael Boudreaux said the audit mischaracterizes the city's use of impact fees. Boudreaux said Miami used its $8 million in surplus impact fees toward infrastructure projects that had previously been funded by general fund dollars.

This change, Boudreaux said, allowed those general fund monies to be transferred back to the reserves. So while impact fees were used to strengthen reserves, it was only indirectly, he said.

Miami City Manager Pete Hernandez backed Boudreax's explanation. ``It's an eligible expense and then you save the general fund,'' he said. ``That's fine.''

Some sections of the audit echo findings published in July in The Miami Herald, which found that Miami's budget team shuffled millions of dollars between the city's capital-improvements department and its basic, all-purpose general fund. The appearance of money moving back and forth raised red flags among some city officials, the newspaper found.