The most heated exchange at last Tuesday's Town Board meeting concerned the draft audit report. It was noted that this year's report identifies 12 control deficiencies and 11 material deficiencies, whereas the previous auditor did not note a single deficiency. Has the town all of a sudden taken a nose dive in its procedures? Probably not. I believe our previous audits for the past several years were inadequate.
What do I know about audits? I was government contracts officer for two government contracting firms and Chief Financial Officer of a private equity firm with a government guarantee by the Overseas Private Investment Corporation. I have represented my firms at audits by the Defense Contract Audit Agency. Been there. Done that.
In early 2008 in open session I questioned the statement in the 2007 audit report that the auditor's review "...would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses." The report went on to say that "...providing an opinion on compliance [with laws, regulations, contracts and grant agreements] was not an objective of our audit, and accordingly we do not express an opinion." I was told by one of the returning commissioners that "this isn't that kind of audit. If we want that kind of audit, we have to pay more." Well, this time we got "that kind of audit" and it cost less.
The previous audit was a whitewash. I am told that the previous auditor sat down with the then town manager and went over some "problem areas." I don't know what they were, because the list was never put on the public record or presented to the board. It should be the prerogative of the board to determine whether shortcomings in compliance require corrective action, not the unilateral determination by the town manager.
It's a good idea to look at any audit or other evaluation with a critical eye. I hope the new board will do that. Not every deficiency is worth correcting, especially in a town this size. But there is no excuse for not making every reasonable attempt to comply with state requirements. In many cases, correcting the auditor's findings is easy to do. In other cases, I believe the auditor is either incorrect or his statement misstates the real problem.
If anyone out there would find it useful, I would be glad to post my item-by-item analysis of the audit report.
The worst mistake would be to simply dismiss the findings of the auditor. This was a good audit. I think future audits by the same firm are likely to become even better, as the auditors achieve greater familiarity with the town's strengths and weaknesses.
Thursday, December 3, 2009
Wednesday, December 2, 2009
December Meeting of Commissioners
Last night (Dec. 1, 2009), the outgoing commission cleaned up some remaining loose ends, County Commissioner Paul Delamar III swore in newly-elected commissioners, and the new commissioners began their own term.
There were four loose ends: outgoing commissioners approved November minutes of regular and special sessions; commissioners formally opened some previously closed minutes and agreed to the eventual release of minutes relating to South Avenue litigation; amended the town's fee schedule to include a parade permit fee of $10 (to cover the cost of insurance rider for the event); and the commissioners granted formal authority to the mayor to exercise day to day supervision of the town manager. Commissioner Styron asked why the board was opening closed minutes, which the town had never done in the past. I explained that the County Commissioners had begun the practice and I thought it appropriate for more open government. Mayor Sage observed that it removes some of the mystery surrounding government actions. The town's attorney explained that many of his clients do this and expressed the view that it should be done every six months or so.
After the new board assumed office, the most interesting exchange took place when Commissioner Warren Johnson drew attention to the audit report, recently received by the town in draft form. Commissioner Johnson found some of the findings disturbing. This will undoubtedly be addressed in more detail at the January meeting when the auditor will formally present the report to the board.
There were four loose ends: outgoing commissioners approved November minutes of regular and special sessions; commissioners formally opened some previously closed minutes and agreed to the eventual release of minutes relating to South Avenue litigation; amended the town's fee schedule to include a parade permit fee of $10 (to cover the cost of insurance rider for the event); and the commissioners granted formal authority to the mayor to exercise day to day supervision of the town manager. Commissioner Styron asked why the board was opening closed minutes, which the town had never done in the past. I explained that the County Commissioners had begun the practice and I thought it appropriate for more open government. Mayor Sage observed that it removes some of the mystery surrounding government actions. The town's attorney explained that many of his clients do this and expressed the view that it should be done every six months or so.
After the new board assumed office, the most interesting exchange took place when Commissioner Warren Johnson drew attention to the audit report, recently received by the town in draft form. Commissioner Johnson found some of the findings disturbing. This will undoubtedly be addressed in more detail at the January meeting when the auditor will formally present the report to the board.
Sunday, November 29, 2009
Leadership and Management
There seems to be some confusion about what the Town Board of Commissioners actually does. The Board is, under NC General Statutes, the "governing body." That doesn't mean that the commissioners as a body or any one of the commissioners as an individual has any administrative role in the day to day operation of Town Hall.
The Board of Commissioners is a legislative body. It makes the rules - passes ordinances, approves the budget, makes policy; but has no operational function. The Board has hiring and firing authority over the Town Manager, but no direct authority. Its only authority is that of oversight.
That sometimes leaves the Town Manager in an awkward position. Does he have five bosses? What if one commissioner says one thing and another commissioner says the opposite?
The Mayor also lacks administrative authority, at least by statute. He has only the authority to chair meetings of the Board of Commissioners. So how does the Town Manager know what to do if a problem arises between Board meetings?
Experienced managers often navigate this maze by establishing informal arrangements. Sometimes that works. Another possibility is to establish a formal arrangement. The Board of Commissioners, for example, has the authority to designate the Mayor as the person the Manager should consult for guidance on day to day matters. The Board would always retain the authority to override the Mayor, but such an arrangement might alleviate some confusion.
What the Board doesn't do is enforce ordinances. That is the responsibility of the Town Manager, through his heads of department.
Every leader or manager has his or her own style of leadership. In more than fifty years managing various size organization, both military and civilian, I have come to some conclusions as to what works best:
1. Positive reinforcement works better than negative reinforcement;
2. Leaders get better results when they seek cooperation and ideas rather than demanding compliance by ordering it, except in extreme cases;
3. Leaders can delegate authority but never responsibility - when a ship runs aground, the Captain is responsible even if he is asleep in his cabin;
4. Effective leaders delegate as many tasks as possible, exercising oversight by intervening only to keep things from going wrong - that's known as "control by negation";
5. Subordinates also need to understand that they are not and cannot be responsible to the degree that the "boss" is.
The Board of Commissioners is a legislative body. It makes the rules - passes ordinances, approves the budget, makes policy; but has no operational function. The Board has hiring and firing authority over the Town Manager, but no direct authority. Its only authority is that of oversight.
That sometimes leaves the Town Manager in an awkward position. Does he have five bosses? What if one commissioner says one thing and another commissioner says the opposite?
The Mayor also lacks administrative authority, at least by statute. He has only the authority to chair meetings of the Board of Commissioners. So how does the Town Manager know what to do if a problem arises between Board meetings?
Experienced managers often navigate this maze by establishing informal arrangements. Sometimes that works. Another possibility is to establish a formal arrangement. The Board of Commissioners, for example, has the authority to designate the Mayor as the person the Manager should consult for guidance on day to day matters. The Board would always retain the authority to override the Mayor, but such an arrangement might alleviate some confusion.
What the Board doesn't do is enforce ordinances. That is the responsibility of the Town Manager, through his heads of department.
Every leader or manager has his or her own style of leadership. In more than fifty years managing various size organization, both military and civilian, I have come to some conclusions as to what works best:
1. Positive reinforcement works better than negative reinforcement;
2. Leaders get better results when they seek cooperation and ideas rather than demanding compliance by ordering it, except in extreme cases;
3. Leaders can delegate authority but never responsibility - when a ship runs aground, the Captain is responsible even if he is asleep in his cabin;
4. Effective leaders delegate as many tasks as possible, exercising oversight by intervening only to keep things from going wrong - that's known as "control by negation";
5. Subordinates also need to understand that they are not and cannot be responsible to the degree that the "boss" is.
Transition
Oriental Town Government is in a state of transition. Tomorrow evening the outgoing and ingoing commissioners will gather to establish the agenda for Tuesday's meeting of the Town Board. At that meeting the outgoing board opens and approves minutes (including opening formerly closed minutes). Following that, the retiring commissioners withdraw and the newly elected board will be sworn in.
As of that event, I will no longer be a commissioner, so my blog has to have a new name. The new blog is named for our boat: http://mile181.blogspot.com. I plan to post my first blog entry that evening. Once I figure out the system, I'll try to link the two blogs so those who wish to do so can continue to post comments on either site.
I may have lost an election, but I haven't lost interest.
As of that event, I will no longer be a commissioner, so my blog has to have a new name. The new blog is named for our boat: http://mile181.blogspot.com. I plan to post my first blog entry that evening. Once I figure out the system, I'll try to link the two blogs so those who wish to do so can continue to post comments on either site.
I may have lost an election, but I haven't lost interest.
Friday, November 27, 2009
Audit
Last year the town's audit report was submitted to the state several months late. The North Carolina Local Government Commission was not amused.
Our new town manager made sure this year's report was completed on time. A major factor in on-time performance was the selection of a new auditing firm, Pittard, Perry & Crone, Inc. That firm has provided the commissioners with its preliminary report.
In the report, our auditor identified twelve significant control deficiencies - that is, deficiencies in internal controls that adversely affect the town's ability to make sure our accounts are accurate. The audit also finds eleven material weaknesses - that is, significant deficiencies that might allow undetected material misstatements of the town's financial position.
How long have these problems existed? In most cases, for years. Why didn't our previous auditor find them? They didn't look. They even told us they didn't look. The audit, Seiler Zachman and Associates explained, was "... not for the purpose of expressing an opinion on the effectiveness of the Town's internal control over financial reporting.... and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses." Why we accepted such an audit is beyond me. My only excuse for the 2007 audit is that it arrived so late it was no help anyhow in dealing with the next budget cycle. In the course of working on the current budget, this commission uncovered a number of the problems noted by our new auditor.
Randy Cahoon is already busy correcting most of these longstanding deficiencies.
Our new town manager made sure this year's report was completed on time. A major factor in on-time performance was the selection of a new auditing firm, Pittard, Perry & Crone, Inc. That firm has provided the commissioners with its preliminary report.
In the report, our auditor identified twelve significant control deficiencies - that is, deficiencies in internal controls that adversely affect the town's ability to make sure our accounts are accurate. The audit also finds eleven material weaknesses - that is, significant deficiencies that might allow undetected material misstatements of the town's financial position.
How long have these problems existed? In most cases, for years. Why didn't our previous auditor find them? They didn't look. They even told us they didn't look. The audit, Seiler Zachman and Associates explained, was "... not for the purpose of expressing an opinion on the effectiveness of the Town's internal control over financial reporting.... and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses." Why we accepted such an audit is beyond me. My only excuse for the 2007 audit is that it arrived so late it was no help anyhow in dealing with the next budget cycle. In the course of working on the current budget, this commission uncovered a number of the problems noted by our new auditor.
Randy Cahoon is already busy correcting most of these longstanding deficiencies.
Tuesday, November 24, 2009
Overcriminalization
Now there's a mouthful. We're going to hear more about it at the federal level: "Right and Left Join to Take On U.S. Over Criminal Justice," today's New York Times headline announces. The article goes on to claim that a rare coalition of conservatives, libertarians and liberals are going to take the issue to the U.S. Supreme Court.
There are, according to the article, more than 4,400 criminal offenses in the federal code, many of them lacking a requirement that prosecutors prove traditional kinds of criminal intent. How did we get that way?
At least since the Nixon administration, Republicans have claimed to be "tough on crime" and Democrats have been afraid to promote being sensible on crime. Now we find we bought into an expensive and ineffective approach. At long last, maybe we can do something about it.
Here in Oriental, we also have a problem with overcriminalization. Our ordinances are full of misdemeanors (criminal acts that must be prosecuted), with fines of up to $500 per occurrence. I am happy to report that, during my time on the Town Board, we removed one misdemeanor: violation of the noise ordinance section regulating outdoor amplified music. I did that.
There are, according to the article, more than 4,400 criminal offenses in the federal code, many of them lacking a requirement that prosecutors prove traditional kinds of criminal intent. How did we get that way?
At least since the Nixon administration, Republicans have claimed to be "tough on crime" and Democrats have been afraid to promote being sensible on crime. Now we find we bought into an expensive and ineffective approach. At long last, maybe we can do something about it.
Here in Oriental, we also have a problem with overcriminalization. Our ordinances are full of misdemeanors (criminal acts that must be prosecuted), with fines of up to $500 per occurrence. I am happy to report that, during my time on the Town Board, we removed one misdemeanor: violation of the noise ordinance section regulating outdoor amplified music. I did that.
Saturday, November 21, 2009
Knock Knock
No, this isn't a joke. Earlier this evening, I heard an insistent and unfamiliar knock. When I opened the door, I was met by a Sheriff's deputy who handed me a yellow document. It was a summons in the case of Tony Tharp and PamlicoToday.com versus the Town of Oriental, William R. Sage, et al. I am one of the et al, along with the town manager and the other members of the outgoing Town Board.
I can't say I was surprised. I have been reading about the suit on Mr. Tharp's new website, PamlicoToday. According to that site, "Tharp is representing himself in the lawsuit against the town. Oriental attorney Scott Davis is likely to get the job of defending the town. Without the suit even being filed, Davis already has billed the town about $300 for telephone consults on PamlicoToday.Com's pending lawsuit."
I wonder how he came to that conclusion.
Being sued, even in an official capacity, is no fun. I would readily decline the honor, if the opportunity arose.
I welcome the reappearance of Mr. Tharp as an active journalist focusing on Pamlico County events. He has in the past covered matters that needed covering, when no one else would. I leave it to the judge to rule on the merits of the case put forth by Mr. Tharp and his client (Mr. Tharp).
I can't say I was surprised. I have been reading about the suit on Mr. Tharp's new website, PamlicoToday. According to that site, "Tharp is representing himself in the lawsuit against the town. Oriental attorney Scott Davis is likely to get the job of defending the town. Without the suit even being filed, Davis already has billed the town about $300 for telephone consults on PamlicoToday.Com's pending lawsuit."
I wonder how he came to that conclusion.
Being sued, even in an official capacity, is no fun. I would readily decline the honor, if the opportunity arose.
I welcome the reappearance of Mr. Tharp as an active journalist focusing on Pamlico County events. He has in the past covered matters that needed covering, when no one else would. I leave it to the judge to rule on the merits of the case put forth by Mr. Tharp and his client (Mr. Tharp).
The Sheriff
There was great relief in Oriental when we learned that the County Sheriff's Department had arrested the alleged perpetrators of a number of recent break-ins and thefts in and around Oriental. That's good news.
Less good is the thought that it was the Sheriff's Office, headquartered in Bayboro, that broke the case instead of our own one-man police department. There are a number of possible conclusions that could be drawn:
1. Our police chief is ineffective;
2. A one-man police department isn't adequate to the task;
3. Oriental should expand its police department;
4. Oriental should close its police department and rely on the County Sheriff for law enforcement.
I have thought about our options and conclude that ours is the worst of all possible arrangements. We would be better off if we hired additional police officers, acquired additional police vehicles (bicycle? motorcycle?), and provided a suitable office from which the force could work. The downside is that it would be more expensive.
Alternatively, we would arguably be better off if we closed our one-man police department and turned enforcement over to the Sheriff. That approach also has a downside: the limited number of deputies available to the Sheriff to cover a large and sparsely populated county. Furthermore, in the absence of a specific inter local agreement, the Sheriff is unlikely to enforce Oriental's municipal ordinances.
In either event, The Town of Oriental should consider inter local agreements to establish procedures for exchanging information between town and county officials, including police reports. I believe we should also establish clear procedures wherein our citizens would summon help by calling 911, whatever the emergency. It would be up to our own police force to keep the dispatcher informed at all times of our officers' whereabouts, duty status, and how they can be reached. Citizens shouldn't have to hunt down the person on duty.
Less good is the thought that it was the Sheriff's Office, headquartered in Bayboro, that broke the case instead of our own one-man police department. There are a number of possible conclusions that could be drawn:
1. Our police chief is ineffective;
2. A one-man police department isn't adequate to the task;
3. Oriental should expand its police department;
4. Oriental should close its police department and rely on the County Sheriff for law enforcement.
I have thought about our options and conclude that ours is the worst of all possible arrangements. We would be better off if we hired additional police officers, acquired additional police vehicles (bicycle? motorcycle?), and provided a suitable office from which the force could work. The downside is that it would be more expensive.
Alternatively, we would arguably be better off if we closed our one-man police department and turned enforcement over to the Sheriff. That approach also has a downside: the limited number of deputies available to the Sheriff to cover a large and sparsely populated county. Furthermore, in the absence of a specific inter local agreement, the Sheriff is unlikely to enforce Oriental's municipal ordinances.
In either event, The Town of Oriental should consider inter local agreements to establish procedures for exchanging information between town and county officials, including police reports. I believe we should also establish clear procedures wherein our citizens would summon help by calling 911, whatever the emergency. It would be up to our own police force to keep the dispatcher informed at all times of our officers' whereabouts, duty status, and how they can be reached. Citizens shouldn't have to hunt down the person on duty.
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