Late last summer I raised the issue of closed session minutes. We discussed the issue at the Town Board meeting September 1, 2009 and agreed to proceed with efforts to open minutes no longer required to be closed.
At the Town Board meeting of October 6, it was revealed that the book containing the minutes could not be located. At the November 10 meeting, commissioners were given a packet of closed minutes to review. I noted that minutes of some closed sessions seemed to be missing. The town staff conducted a search of computer records and were able to reprint most of the missing minutes, but signed copies were still not found.
At the Town Board meeting of December 1, the outgoing board opened some of the formerly closed minutes to the public. The missing signed copies had still not been found.
After Christmas weekend of 2009, I learned, the missing notebook reappeared in the office. The fixed asset ledger which couldn't be found during the audit has also reappeared.
Whoever knows where the documents had gone and how they were returned hasn't disclosed the information, to the best of my knowledge. Why would anyone remove the notebooks from Town Hall? I don't have any idea. The documents themselves remain silent.
Another odd event.
Thursday, January 14, 2010
Wednesday, January 13, 2010
Pogo
I checked the calendar this morning and noticed that Friday the thirteenth came on Wednesday this month.
That observation betrays something about my age. I am of that fortunate generation blessed with the chance to read the late Walt Kelly's daily comic strip, "Pogo." Not only that, I was old enough to mostly understand it.
Pogo most famously observed, "We have met the enemy and he is us."
Where is Walt Kelly when we need him?
That observation betrays something about my age. I am of that fortunate generation blessed with the chance to read the late Walt Kelly's daily comic strip, "Pogo." Not only that, I was old enough to mostly understand it.
Pogo most famously observed, "We have met the enemy and he is us."
Where is Walt Kelly when we need him?
Tuesday, January 12, 2010
Observing the Proprieties: Elected Officials
I have strong views on how it is appropriate for government officials to act. These views flow from my studies of American Government, more than a quarter century in the US Navy (including eight years service on headquarters staffs) and fifteen years or so performing government contracts. Last November I tried to distill those views into a post on leadership and management. This post wasn't targeted at any particular individual but was prompted by my growing concern over organizational issues at town hall.
During my two years as a town commissioner, I never had any illusion that I possessed authority over the town manager with respect to daily operations. I certainly offered advice and suggestions. They were often ignored. I found that appropriate. After all, I was only one of five commissioners. The only authority I possessed was as a part of that body.
I never possessed a key to town hall. I saw no need. I never possessed a key either to the outer office or to the manager's office or to any of the file cabinets or safes. I never possessed any passwords to any of the computers in town hall. Had a town manager offered such things to me I would have declined.
In our country, even at the level of town government, we have a wall of separation between legislative, executive and judicial functions. Yes, there are occasional shared functions as when the town board acts in a quasi-judicial capacity. But that is a tightly governed exception.
Regrettably, in the Town of Oriental, over the holiday period, the separation between legislative and executive functions was breached. At least twice.
This is beyond rumor. On Christmas weekend, Commissioner Venturi was seen in town hall, in both the outer office and in the town manager's office, accompanied by a town employee. She appeared to be rummaging through the town manager's files. Whether she removed any original documents, I don't know. I do know that a day or two later, she appeared with a bundle of financial records at The Bean and went over them with one of our citizens.
On New Year's weekend, Commissioner Venturi was seen in town hall again, in the outer office, printing out records from the town's accounting system. I do not believe Commissioner Venturi has a password for the town's accounting software. I believe she is not an authorized user. She could not have performed such an operation without breaching the integrity of the town's accounts.
The witnesses in both cases are absolutely reliable.
By the way, if any town employees provided assistance for any breaches, I hope the Town Board will make the rules absolutely crystal clear and enforce them in the future.
The town needs to make an assessment as to whether personal information required by law to be protected has been compromised by a security breach. If it has, there may be a requirement to report the security breach to individuals and to the NC Attorney General. This is serious stuff.
During my two years as a town commissioner, I never had any illusion that I possessed authority over the town manager with respect to daily operations. I certainly offered advice and suggestions. They were often ignored. I found that appropriate. After all, I was only one of five commissioners. The only authority I possessed was as a part of that body.
I never possessed a key to town hall. I saw no need. I never possessed a key either to the outer office or to the manager's office or to any of the file cabinets or safes. I never possessed any passwords to any of the computers in town hall. Had a town manager offered such things to me I would have declined.
In our country, even at the level of town government, we have a wall of separation between legislative, executive and judicial functions. Yes, there are occasional shared functions as when the town board acts in a quasi-judicial capacity. But that is a tightly governed exception.
Regrettably, in the Town of Oriental, over the holiday period, the separation between legislative and executive functions was breached. At least twice.
This is beyond rumor. On Christmas weekend, Commissioner Venturi was seen in town hall, in both the outer office and in the town manager's office, accompanied by a town employee. She appeared to be rummaging through the town manager's files. Whether she removed any original documents, I don't know. I do know that a day or two later, she appeared with a bundle of financial records at The Bean and went over them with one of our citizens.
On New Year's weekend, Commissioner Venturi was seen in town hall again, in the outer office, printing out records from the town's accounting system. I do not believe Commissioner Venturi has a password for the town's accounting software. I believe she is not an authorized user. She could not have performed such an operation without breaching the integrity of the town's accounts.
The witnesses in both cases are absolutely reliable.
By the way, if any town employees provided assistance for any breaches, I hope the Town Board will make the rules absolutely crystal clear and enforce them in the future.
The town needs to make an assessment as to whether personal information required by law to be protected has been compromised by a security breach. If it has, there may be a requirement to report the security breach to individuals and to the NC Attorney General. This is serious stuff.
Oddities: 1
Among recent oddities at Town Hall that no one reported in the media was the curious exchange at the January 5 Town Board meeting over minutes.
The usual agenda sequence is that just after the pledge of allegiance, the Town Board adopts minutes of the previous regular meeting of the Town Board as well as of both closed and open sessions that may have been held in the interim. This is usually the least interesting or controversial part of the meeting. Occasionally one of the board members will propose an amendment to the minutes, and if there is any disagreement among members, it is quickly resolved and the minutes approved.
This time, as best I could tell from the back row, the board objected to both the form and content of closed session and open session minutes prepared by the recording secretary. Apparently the board had provided direction to the recording secretary at the agenda meeting. It seems that, instead of simply removing the text board members wanted removed, she used word processing software to line through the passages. When members of the board objected, she informed them that she "stands by" the version she prepared. Then she argued with the mayor over the facts.
It is worth noting that North Carolina General Statutes do not require minutes to be verbatim. If they did, the attic of Town Hall (where old records are stored) might have collapsed from the weight. The recording secretary is also not in the position of a court reporter. The minutes are under complete control of the Town Board.
Following a heated argument between the recording secretary, town commissioners and the mayor, the board once again directed the recording secretary to remove certain passages from the minutes. Then when the vote was held, Commissioner Venturi voted "no."
I have personally never seen an Oriental commissioner vote against adopting minutes. I have asked long time residents, including former commissioners and none of them recalls it ever happening before.
That's odd behavior.
The usual agenda sequence is that just after the pledge of allegiance, the Town Board adopts minutes of the previous regular meeting of the Town Board as well as of both closed and open sessions that may have been held in the interim. This is usually the least interesting or controversial part of the meeting. Occasionally one of the board members will propose an amendment to the minutes, and if there is any disagreement among members, it is quickly resolved and the minutes approved.
This time, as best I could tell from the back row, the board objected to both the form and content of closed session and open session minutes prepared by the recording secretary. Apparently the board had provided direction to the recording secretary at the agenda meeting. It seems that, instead of simply removing the text board members wanted removed, she used word processing software to line through the passages. When members of the board objected, she informed them that she "stands by" the version she prepared. Then she argued with the mayor over the facts.
It is worth noting that North Carolina General Statutes do not require minutes to be verbatim. If they did, the attic of Town Hall (where old records are stored) might have collapsed from the weight. The recording secretary is also not in the position of a court reporter. The minutes are under complete control of the Town Board.
Following a heated argument between the recording secretary, town commissioners and the mayor, the board once again directed the recording secretary to remove certain passages from the minutes. Then when the vote was held, Commissioner Venturi voted "no."
I have personally never seen an Oriental commissioner vote against adopting minutes. I have asked long time residents, including former commissioners and none of them recalls it ever happening before.
That's odd behavior.
Saturday, January 9, 2010
The Water Board finally Meets
The most positive development to come out of the January meeting of Oriental's Town Board is that the water board has finally been convened. See my earlier thoughts on this subject.
Commissioner Johnson is apparently determined to establish terms of reference for the water board similar to those governing other advisory boards. This will be a good thing.
I hope the water board is able to investigate where the town's missing water is going. I have known about the unexplained disappearance of water for some time. Heidi Artley told me about the problem and offered a few possible explanations, each of which calls for investigation. I'm not convinced that backwashing pipes and dumping tanks provides an adequate explanation.
With respect to dumping tanks, I was repeatedly told by the previous town manager that the water in the towers is just there for storage and is not, by design, included in the circulation. Therefore the water loses its treatment and has to be dumped after awhile. I recently learned from the County's engineer that when this happens, as in the case of the County's Kershaw Road tank, it indicates an imbalance in the system. They plan to correct the Kershaw Road problem when they install the new water tank at Arapaho. Maybe we should have a new engineer check out our system.
Commissioner Johnson is apparently determined to establish terms of reference for the water board similar to those governing other advisory boards. This will be a good thing.
I hope the water board is able to investigate where the town's missing water is going. I have known about the unexplained disappearance of water for some time. Heidi Artley told me about the problem and offered a few possible explanations, each of which calls for investigation. I'm not convinced that backwashing pipes and dumping tanks provides an adequate explanation.
With respect to dumping tanks, I was repeatedly told by the previous town manager that the water in the towers is just there for storage and is not, by design, included in the circulation. Therefore the water loses its treatment and has to be dumped after awhile. I recently learned from the County's engineer that when this happens, as in the case of the County's Kershaw Road tank, it indicates an imbalance in the system. They plan to correct the Kershaw Road problem when they install the new water tank at Arapaho. Maybe we should have a new engineer check out our system.
Funny Stuff
There's some funny (odd) stuff going on at Town Hall lately. The most interesting oddities seem to be completely ignored by our local investigative reporters. Wonder why?
Thursday, January 7, 2010
Who Does the Auditor Work for?
So much nonsense has been uttered about Oriental's audit, I thought I'd try to clear the air
for the benefit of those few who read my blog.
The auditor works for the Town Board of Commissioners. He does not work for the town manager. The audit is, in effect, a report to the Town Board on the town's financial health and the effectiveness of its procedures. It needs to be thorough, for the benefit of the town.
During the last town board I pressed to replace our former auditor. The board voted unanimously to make the change.
I can't speak for the others, but here are my reasons:
1. Other elected officials in Eastern North Carolina advised that it is good practice to replace the auditor every three to five years;
2. Our former auditor had not noticed that our occupancy tax should be categorized as a restricted fund like Powell Bill funds, to be used only for specific purposes and therefore not to be counted as part of the town's unrestricted reserve fund;
3. Our auditor did not notice that the administrative fee the town charged the water fund had not been recalculated since 2001 and therefore the taxpayers were subsidizing water rate payers about $35,000 per year;
4. Our auditor did not noticed that the tourism board expenditures of occupancy tax funds were not being accounted for in our accounting software, but kept on a separate sheet of paper;
5. Our auditor didn't notice that the tourism board was "rolling over" funds from one budget year to the next;
6. Our auditor either did not notice or did not object to having a large "miscellaneous" line item in each department's budget, contibuting to sloppy bookkeeping and lack of budget discipline;
7. For the fiscal year ending June 30, 2008, the auditor provided the town on February 17, 2009 a list of 8 "Adjusting Journal Entries" for the Water Fund including 21 line items, totaling $241,330.44 with a net income effect of $81,273.36. Among the adjustments was one that increased net income by 3,503.48, labeled "Adjust cash to reconcile balance;"
8. On the same date the auditor provided 15 Adjusting Journal Entries for the Oriental General Fund consisting of 55 line items totaling $258,470.77, with a net income effect of $42,107.43;
9. The town received two complaints from the Local Government Commission about the lateness of the 2008 audit.
An audit should have addressed all of these problems.
When the auditor finally made his report of the 2008 audit to the Town Board in August 2009, more than a year after the end of the fiscal year that it covered, he made no mention of the Adjusting Journal Entries nor did he offer an explanation. Neither did he mention or explain the letter he received from the Local Government Commission directing him to make two changes before they would approve his final invoice and ordering three other less urgent corrections to the town's procedures.
I am not an accountant and can't say whether the AJE's complied with Generally Accepted Accounting Practices, but they looked a lot like gun decking to me. (See earlier post).
In late summer of 2008, our town manager at the time assured the Town Board that he had looked, and concluded that our existing firm of Seiler, Zachman & Associates offered the best deal available, even though they had just increased their fee by $3,000. He recommended we continue with them, and the Board approved his recommendation.
There seemed no reason at the time to question that judgment. By the summer of 2009, however, I was convinced that changing auditors was a matter of urgency.
I asked the new town manager to investigate whether it would be possible to retain a new auditor in time for him to audit our books for 2008 - 2009. He consulted a number of experienced people for recommendations, including a CPA who formerly resided in Oriental and served on the Town Board. He contacted three or four recommended firms and found that Pittard, Perry & Crone would agree to do the job in a timely fashion at a lower price than Seiler, Zachman & Associates (now Seiler, Singleton) had been charging. One of the attractive features of the service provided is that the Pittard, Perry & Crone auditor, Chris Burton, planned to come to Oriental to perform the audit, rather than perform it remotely as Seiler, Singleton did. The procedure for previous audits was that then town manager Wyatt Cutler personally delivered the town's documents to Mr. Singleton's office in Little Washington. A few years ago one of the town commissioners asked Mr. Cutler "you mean the auditor doesn't come here?" Mr. Cutler replied that wasn't necessary.
When I learned that we would be able to change auditors, Candy Bohmert and I called a special meeting. The town manager briefed the board, and Commissioner Styron moved that we hire Pittard, Perry & Crone. I think that unanimous decision was the right one.
for the benefit of those few who read my blog.
The auditor works for the Town Board of Commissioners. He does not work for the town manager. The audit is, in effect, a report to the Town Board on the town's financial health and the effectiveness of its procedures. It needs to be thorough, for the benefit of the town.
During the last town board I pressed to replace our former auditor. The board voted unanimously to make the change.
I can't speak for the others, but here are my reasons:
1. Other elected officials in Eastern North Carolina advised that it is good practice to replace the auditor every three to five years;
2. Our former auditor had not noticed that our occupancy tax should be categorized as a restricted fund like Powell Bill funds, to be used only for specific purposes and therefore not to be counted as part of the town's unrestricted reserve fund;
3. Our auditor did not notice that the administrative fee the town charged the water fund had not been recalculated since 2001 and therefore the taxpayers were subsidizing water rate payers about $35,000 per year;
4. Our auditor did not noticed that the tourism board expenditures of occupancy tax funds were not being accounted for in our accounting software, but kept on a separate sheet of paper;
5. Our auditor didn't notice that the tourism board was "rolling over" funds from one budget year to the next;
6. Our auditor either did not notice or did not object to having a large "miscellaneous" line item in each department's budget, contibuting to sloppy bookkeeping and lack of budget discipline;
7. For the fiscal year ending June 30, 2008, the auditor provided the town on February 17, 2009 a list of 8 "Adjusting Journal Entries" for the Water Fund including 21 line items, totaling $241,330.44 with a net income effect of $81,273.36. Among the adjustments was one that increased net income by 3,503.48, labeled "Adjust cash to reconcile balance;"
8. On the same date the auditor provided 15 Adjusting Journal Entries for the Oriental General Fund consisting of 55 line items totaling $258,470.77, with a net income effect of $42,107.43;
9. The town received two complaints from the Local Government Commission about the lateness of the 2008 audit.
An audit should have addressed all of these problems.
When the auditor finally made his report of the 2008 audit to the Town Board in August 2009, more than a year after the end of the fiscal year that it covered, he made no mention of the Adjusting Journal Entries nor did he offer an explanation. Neither did he mention or explain the letter he received from the Local Government Commission directing him to make two changes before they would approve his final invoice and ordering three other less urgent corrections to the town's procedures.
I am not an accountant and can't say whether the AJE's complied with Generally Accepted Accounting Practices, but they looked a lot like gun decking to me. (See earlier post).
In late summer of 2008, our town manager at the time assured the Town Board that he had looked, and concluded that our existing firm of Seiler, Zachman & Associates offered the best deal available, even though they had just increased their fee by $3,000. He recommended we continue with them, and the Board approved his recommendation.
There seemed no reason at the time to question that judgment. By the summer of 2009, however, I was convinced that changing auditors was a matter of urgency.
I asked the new town manager to investigate whether it would be possible to retain a new auditor in time for him to audit our books for 2008 - 2009. He consulted a number of experienced people for recommendations, including a CPA who formerly resided in Oriental and served on the Town Board. He contacted three or four recommended firms and found that Pittard, Perry & Crone would agree to do the job in a timely fashion at a lower price than Seiler, Zachman & Associates (now Seiler, Singleton) had been charging. One of the attractive features of the service provided is that the Pittard, Perry & Crone auditor, Chris Burton, planned to come to Oriental to perform the audit, rather than perform it remotely as Seiler, Singleton did. The procedure for previous audits was that then town manager Wyatt Cutler personally delivered the town's documents to Mr. Singleton's office in Little Washington. A few years ago one of the town commissioners asked Mr. Cutler "you mean the auditor doesn't come here?" Mr. Cutler replied that wasn't necessary.
When I learned that we would be able to change auditors, Candy Bohmert and I called a special meeting. The town manager briefed the board, and Commissioner Styron moved that we hire Pittard, Perry & Crone. I think that unanimous decision was the right one.
Wednesday, January 6, 2010
Gundecking
One of the earliest skills I learned in the navy was "gundecking." That was the practice of running off to a quiet secluded compartment and making up records ("logs") just before an inspection. These were invariably logs that were supposed to be maintained on a real time basis, but that had been overlooked. It was a kind of petty dishonesty. Sometimes more than petty.
There was an art to gundecking. Those unskilled in the art would have one person make the entries and use the same pencil or pen. Those more skilled would change the writing instrument from time to time and leave a smudge or two on the log book. Gundecking would seem more plausible if the entries were made in at least three different hands.
Sailors (and officers) who gundecked records always had ample justification. Records hadn't been kept in real time because they had more urgent tasks. Doing the job was more important than all that pesky paperwork. The ship had to be painted. The guns had to be fired. Collecting empty brass and accounting for it was an annoyance. Besides, with fifty or a hundred pounds of brass, you could have the whole ship painted in Hong Kong. Surely that was more important. The crew was too small for all that paperwork, anyhow.
So usage data wasn't accurate and the Supply Officer didn't know what to order. We could make up the difference with cumshaw. What does cumshaw mean? Watch "Operation Petticoat."
There was an art to gundecking. Those unskilled in the art would have one person make the entries and use the same pencil or pen. Those more skilled would change the writing instrument from time to time and leave a smudge or two on the log book. Gundecking would seem more plausible if the entries were made in at least three different hands.
Sailors (and officers) who gundecked records always had ample justification. Records hadn't been kept in real time because they had more urgent tasks. Doing the job was more important than all that pesky paperwork. The ship had to be painted. The guns had to be fired. Collecting empty brass and accounting for it was an annoyance. Besides, with fifty or a hundred pounds of brass, you could have the whole ship painted in Hong Kong. Surely that was more important. The crew was too small for all that paperwork, anyhow.
So usage data wasn't accurate and the Supply Officer didn't know what to order. We could make up the difference with cumshaw. What does cumshaw mean? Watch "Operation Petticoat."
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