Rubbing Nickels

I found the Saturday Recorder editorial Time for State to Audit City Books to be problematic on a few levels.

First, if you posit that the city does not have two nickels to run together, you cannot simultaneously posit that the city has no sense of its finances especially in light of the recent decision to bond for a fair chunk of money.

If that is so, then you should , from a financial perspective, rail against the explosion of debt that , if we do not have two pennies to rub together, you will never make the bond payments. Yet, somehow no one rails ever rails against incurring debt — we always have nickels, quarters and half-dollars to rub together for that.

Second, the notion of an audit is misplaced as somehow not costing anything– it’s free! — is unrealistic. The expense to the situation is for remediating whatever the issues are. An audit is the office visit, and while maybe that will not cost much, the surgery may be expensive. To expect that the audit will actually resolve the issues is wholly incorrect as the audit serves to identify areas of concern and risk but not do a single thing to resolve it– that is the function of the management/administration and to expect that the state will resolve the issues on their nickel is unrealistic. Or, perhaps we can always go the other preferred route to save money — let’s get high school kids to do it!

Third, there is a fundamental concern with the proper execution of the controller function. Suddenly the very same voting public forgets that many of them voted for the position to be elected versus appointed. Amnesia is a wonderful thing.

At the time of the election for controller, I wrote this:

If I were enrolled, I’d pull the lever for Mayor Thane (here) and for Manfred Phemister (here) for Controller . On the Controller’s race, I just want to point out that accounting is a subset of what a controller does; you also need a broader view of finances and how to best analyze, project and scenario numbers. Again, I’m just not able to give this topic justice right now but that view underlies my reasoning for my choice.

Suddenly the voting public and editors wag their fingers at the state of affairs utterly forgetting that they almost gave the position to someone with zero accounting, finance or financial management experience in the last election. I guess notions of competency and expertise are rather quaint.

Let’s be serious from a governance perspective: the city will need to spend money to fix whatever the issues are. Let’s not pretend audits fix the issue. Second, and most importantly, there is a fundamental question on the execution of the role in fulfillment of the duties of controller. That is a serious question and let’s not brush it aside thinking an audit will fix it. It will not.

I admit not knowing the specific nature of the fundamental problems and hence I don’t know the optimal solution. But I do know that proper financial governance and management requires a hard look at how the individuals in the financial organization — elected or otherwise– execute their role. That’s the real audit and that ain’t coming from the state; that needs to come from the city itself. And it ain’t free. And it ain’t acceptable either.

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