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Controller Wendy: ‘Departments Must Report Fraud.’ Really?

PERSPECTIVE - Regulators trusted Bernie Madoff’s explanations as to how he was able to offer high returns; you see where that got us. City Controller Wendy Greuel stated in response to the recent instances of fraud in the Los Angeles Housing Authority: “In order for my staff to guard taxpayer dollars, departments must be required to report any and all instances of fraud, waste and abuse so that I can closely monitor the city’s resources to stop these egregious acts.”

No, Wendy. Depending on others to report irregularities is woefully inadequate.

You need audit programs designed to uncover fraud to detect it.

Even then, there is no guarantee you will smoke it out, but by applying resources to areas that have the potential for illegal quid pro quo, the chances of exposing fraudulent activity are greater.

But Greuel would rather roll out the simple performance audit reports, the results of which look great on paper but are worthless unless the city is prepared to act on them.  What else would you expect from someone with the management judgment of Dilbert’s pointy-haired boss?

Auditing is about judgment and setting priorities.  There is enough history to suggest that those charged with accounting and controlling the financial resources in Los Angeles are generally incapable of protecting the interests of the citizens.  

They are incapable of collecting money timely, spending money without evaluating the cost vs benefits and identifying the most obvious misappropriation of funds.

Knowing this, a savvy auditor would prioritize limited resources and allocate them to protect the assets and integrity of the city. Performance audits would be largely unnecessary if the city evaluated its general managers on cost control and service.  There is no incentive for the typical GM to beat expectations, if indeed there are any expectations to begin with.

Greuel is neither an auditor nor savvy. She does not know how to evaluate risk and refuses to pressure the City Council to insist on holding department managers’ feet to the fire.  

Merely issuing reports and moving on to the next performance audit on the list does not produce results; it generates paper and fifteen minutes of news coverage that too many people will misinterpret as action.

As I have stated before, Greuel is the epitome of form over substance.

I can only hope voters see through her phoniness and consider one of the other candidates for mayor in 2013.

(Paul Hatfield is a CPA and serves as Treasurer for the Neighborhood Council Valley Village.  He blogs at Village to Village and can be reached at: This email address is being protected from spambots. You need JavaScript enabled to view it. )
–cw

Tags: Controller, Wendy Greuel, Bernie Madoff, performance audits, Los Angeles





CityWatch
Vol 9 Issue 84
Pub: Oct 21, 2011

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