The appearance of “Dixon Embezzlement Serves as ‘Case Study’ on Oversight Practices” over the weekend gives me another shot at commenting on this story (now that I am out of the hospital, hopefully for a good long time). Thanks, Rockford Register Star!
First, let’s take care of the error in the story. It says
Assuming the auditing firm signs off on the city’s finances for the year, the report is then sent to the Illinois comptroller’s office. But the office only files them and does not have the time, funding or legal authority to conduct independent reviews, said Brad Hahn, communications director for Comptroller Judy Baar Topinka.
“The comptroller’s office serves as a repository for audits and annual financial reports,” he said. “(Dixon’s) filings were all on time and complete. There were no red flags.”
It is not hard to check the facts. Go here, and you’ll see that, according to the state’s own website, Dixon has failed to submit its Comprehensive Annual Financial Report (CAFR) for FY2011, which ended April 30, 2011.
The comptroller claims a CAFR submission compliance rate of 86%, but as indicated above, has no enforcement power over the scofflaws.
Would that really constitute a red flag, though? Maybe, but good luck finding anything truly amiss in any sort of legal sense from a CAFR. What CAFRs are really for is to give people, including “civilians” like you and me, a sort of snapshot of the financial health of a community.
For example, if you’ve been visiting City Barbs with any regularity, you know that I’m currently concerned about a) DeKalb’s promoting recent rising revenues as a spending “all clear” signal even though they are mostly of temporary and/or highly variable varieties; b) long-term liabilities in general; c) rapidly rising annual pension costs; and d) DeKalb residents’ growing per capita debt burden. These concerns all rose from studies of the CAFRs but are about the results of policies, not of criminality per se.
The perfect example of how little help a CAFR can be in detecting wrongdoing is the story of the growth of the Waste Fund into a slush fund containing $485,000 — a development undiscovered by anyone looking at budget or CAFR until layoffs were staring us in the face in mid-2008 and city staff had to come clean to avoid them.
No, if you wanted to find the corruption in DeKalb, I suspect you’d best start with an investigation into how the city manager uses his spending authority, and at the practices used in awarding no-bid contracts — you know, like what should have happened when the Wogen scandal broke.
Therein lies the biggest difference between Dixon and DeKalb. No matter what you might have to say about the Dixon commissioners’ naivete or complacency or whatever, once the administration came upon evidence of wrongdoing, from all accounts it immediately called in the authorities and is welcoming additional scrutiny.
It’s the difference between “if” vs. “when.” DeKalb is saying something like this can’t possibly happen here, another symptom of its deep denial that anything it does could actually be wrong. Dixon’s cleaning house, while DeKalb never acknowledges the existence of any dirt at all.