Entries Tagged 'Audit' ↓

Councilor Stehly gets it done without even voting

As I have mentioned in the past, Councilor Stehly has gotten a lot of things done without the votes, but by just simply putting on pressure.

She did it again this afternoon at the Audit Committee Meeting.

She asked for several things from the podium during the 2020 Audit Plan presentation;

• An external audit of the Parking System (Theresa mentioned that she found it odd that the city wants to keep building or subsidizing parking ramps downtown yet wants to sell off flat parking lots).

• An audit of the CMAR (Construction Manager at Risk) process.

• Travel expenses of city staff (I guess that during the current administration, city directors and staff, and mostly the mayor, have been taking a lot of ‘junket trips’ but not really giving a report to the public as what they are doing on the trips. Recently TenHaken put up a short column about his trip to China, but never really told us what was really discussed. We also get a lot of updates on FB from the Innovation Manger and all the different cities he has been drinking in.

• A study of City Director salaries in comparison to other cities. Something I pointed out the last time the HR department did a wage study, but did NOT include city directors. How convenient.

The committee argued the merits of all the items. Councilor Brekke mentioned that maybe the city council budget analyst could look into the last two items and do a presentation on those findings – which I agree.

Audit Manager Nelson suggested that the CMAR audit would have to be done externally due to it’s speciality of the audit.

But they got into a long discussion about the external parking ramp audit. Councilor Kiley said he didn’t want to put it on the audit plan because they are in the middle of litigation, but other members argued that there was nothing wrong with putting it on the agenda, and if they have to pull it in the future, they can. The amendment to add it passed with Kiley and Chair Neitzert voting against it. Councilor Stehly doesn’t sit on the committee so she couldn’t vote on it.

T.J. TypeOver said they won’t audit it until it is done;

T.J. Nelson, deputy chief of staff in the mayor’s office, said City Hall isn’t opposed to a review of the parking system or the ramp, but not until the ramp project is complete and the dust settles on any lawsuits surrounding it.

“The administration will complete a comprehensive review of the process that led to the prior approval of this project by the Huether administration. This will take place following the ramp’s completion and resolution of any outstanding legal matters,” he said. “At this time, the administration supports a financial or construction audit consistent with the time frame outlined above.”

Yeah, after we have f’d up in every possible way we can, then we will tell the public how that f’k up occurred. WHAT!? Wouldn’t it be wise to figure that out BEFORE we move ahead with another developer or even litigation? Wouldn’t this help our case? Sometimes I wonder if putting money in a burn barrel would be a better way to spend money then paying city communication staff.

There was also a presentation on the Landfill Audit. There was a lot of problems going on out there where basically employees were not following procedures and not doing proper inspections. You can listen for yourself. My view is the city is missing out on a lot of landfill revenue due to the laziness of the employees. I think they were warned about these things in past audits. I think it is time to start handing our pink slips, then maybe they will get the picture.

Chair Neitzert mentions at the end they are going to start the process of hiring another staff auditor (which they do need). I wonder if this time they will actually put an employment ad in something besides Tidbits and the City Hall’s lunchroom?

PUBLIC TRANSIT MEETING

I still haven’t heard all the details of what happened, but I guess a committee member got a little irate about how the public is being left out of the decisions they are making. More to come.

Sioux Falls City Councilor Neitzert ManSplains what our internal auditor does

Did the City of Sioux Falls Audit Committee really explore all candidates?

I know, I want to put this to rest as much as the rest of you. The RS5 made another horrible decision, and it will be fun to bring it up when a couple of them run for re-election. But I could care less about that now, because we must address BAD decisions in the here and now.

A couple of days ago I got a tip that some of the audit committee members (non-councilors) were not happy about the selection process, but were told to stifle it.

Today I was told from a city councilor a potential candidate told them they weren’t even considered or interviewed for the position. They applied late last year.

According to this candidate, they were never even considered by the audit committee. I first want to say that I have never met them, also, from reading the resume I saw, they are young and have a short work history, so I can’t tell you if they are qualified or not. But from reading the education and work experience (they are a certified auditor), I would have at least interviewed them. Am I missing something here? It would be one thing to interview them and then determine they are not qualified for the job, but to just look at this resume and go, “Nah, we already have someone picked out.”

And that seemed to be the case.

I wish this person good luck in their employment endeavors and that they should probably be thanking themselves they didn’t get the job. I’m just sayin’.

Sioux Falls Parking Department must be audited immediately

Some of the same players and city employees who helped the Rubber Stamp 6 and Bowlcut-n-Bucktooth ramrod the parking ramp through are still employed by the city, namely Matt Nelson, whose wife just became the audit something manager.

It will be interesting to see if the city will do any internal investigating of how city employees let this bad deal go through. In reality, it should not even have gotten to the city council for approval.

Now it will cost taxpayers more money to hire an external auditor. The hits just keep coming.

An Open Letter to Sioux Falls City Councilor Greg Neitzert

Over the past year there has been many things said by our esteemed councilor at public council meetings, on Facebook and in the media. It all culminated last week with the special meeting to hire our new internal audit manager and a discussion on the Greg Belfrage show between councilors Stehly and Neitzert in which Neitzert called Stehly a bully and a ‘LIAR’ he also inferred that councilor Starr was a liar to (which is actually a violation of council ethics).

While this was all going on Neitzert kept trying to say that the character of the new city council employee was being questioned, assassinated and denigrated. I still don’t know what he is talking about. In fact if you watch the council meeting or listen to anyone talk about her in the meeting, NOBODY questions her character only her qualifications. Some even state they are NOT questioning her character. If you are questioning someone’s qualifications for a job, that is NOT questioning their character – those two things are polar opposites.

So here are the FACTS that Councilor Neitzert claims people are ‘Lying’ about;

• Nobody on the City Council or during public input questioned Mrs. Nelson’s character. (I can’t speak to random comments on FB)

• While Mrs. Nelson has extensive financial and business experience (12 years) she has NO internal audit experience or supervisor experience.

• Mrs. Nelson has broad conflicts of interest with the city, not just with her husband as a director, but with the finance department she currently works in and a very close family friendly relationship with one of the sitting city councilors.

• Mrs. Nelson was warned in advance (before her nomination was publicly noticed) that the city council wasn’t in full consensus of her employment. She knew there would be a high level of scrutiny. This of course is NOT Mrs. Nelson’s fault, this ‘doubt’ was caused because of a poorly executed hiring process by councilor Neitzert. She still chose to move forward knowing it would be a contentious debate.

• Councilor Neitzert denies he ramrodded the process. He says that most if NOT all resolutions are noticed on a Friday and Voted on a Tuesday. While there is a lot of truth to that, most resolutions are benign, and have full support of the city council. They include things like gifting old equipment to other communities, appointing city board members, allowing SculptureWalk, giving out awards, etc. They don’t usually involve hiring a city council manager of this importance. They also are NEVER brought forward in a special meeting that has a singular objective (ex; golf contract). It was noticed on a Holiday Weekend, with NO attached documents that explained who Mrs. Nelson was or why she was qualified. It was also during a special meeting at 5:30 PM the following Tuesday. Her appointment could have easily been postponed for several weeks so the public could vet her. Just the day after her appointment Neitzert said it would be a full month before she transitioned into her position. So what was the rush? Councilor Stehly had NO choice but to put out a robo-call to inform the public this was coming down the pipe – FAST. While you may have had issues with her verbiage and tone, she did NOTHING wrong, or made false statements. It was ‘ramrodded’ and the parking ramp debacle was ‘controversial’.

• The city’s legal team blew off the nepotism and conflict of interest concerns as being ‘legal’ and since they were legal, in their eyes there were no problems. South Dakota has an ‘F’ rating in government corruption, mostly because we have NO ethics, conflict of interest or nepotism laws (or very weak ones).

• Mayor TenHaken never said whether Mrs. Nelson would be missed or even replaced (this would have been nice to know during a longer vetting process). You would think an employee with this much experience in finance, a person who implemented key finance software, and an employee who won an award (from the past mayor) would be valued by the administration and asked to stay. (I’m hearing from my city hall moles that there was a discussion about it, but since it was a personnel issue, and Mrs. Nelson would be bettering her career, they just let her proceed. If all this happened, I’m not sure why any of that is confidential and couldn’t be shared at the special meeting by the HR department).

• Councilor Neitzert said since he had 6 councilors sign off on her nomination he didn’t feel the need to get a total consensus. Though, during the meeting, councilor Brekke pointed out that most city council employees have a consensus of the entire council before getting approved. In fact, in the 13+ years I have been blogging about the city, the last time I can remember there was NO consensus of the city council was when they voted to terminate City Clerk Owen, and that discussion was behind closed doors with a public vote.

• After 3 weeks of job employment ads mostly online without the assistance of a job recruitment agency, the city got 15 candidates in which NONE of them had audit experience and only ONE of them was a current city employee, with an obvious conflict, and she was chosen. Some people call that ‘inside baseball’ but I won’t speculate any further.

Councilor Brekke suggested to Councilor Neitzert (who is the audit chair) that a broader search be done to find someone with audit experience. Her request was either ignored or rejected.

Councilor Starr, who was part of the hiring committee suggested early on that they hire a recruiter. They said it would cost too much, though Starr pointed out you could get one as low as $5K, and in most cases you don’t pay unless they produce qualified candidates. In other words, no harm, no foul. His suggestion was also discarded.

I think ‘the fix was in’ as soon as Mrs. Nelson turned in her application, and there was no going back from there. Just listen to what Neitzert said on Belfrage, ‘Shana is a Rock Star!’ Great, but why not do a broader search for a qualified ‘Rock Star’? And why totally ignore the suggestions of your fellow councilors? Who is the bully?

While I could care less if Councilor Neitzert wants to act like a Crazed Man-Child in the media, I am truly asking him to stop calling his fellow councilors liars, bullies, self-appointed victims and disrespecting and ignoring their opinions. If you disagree, you simply state that, and move on. If they have good suggestions about the hiring process, you try them. It’s really that simple.

As I have pointed out above, there is only one reason why this process when to Sh*t, and that person needs to take a hard look into the mirror. The only one who truly let down Mrs. Nelson through this process was the one leading the process, City Councilor & Audit Chair, Greg Neitzert.

UPDATE III: Sioux Falls City Councilors Stehly & Neitzert guests on Belfrage

UPDATE III: Neitzert calls himself ‘Audit Manager’ in the Belfrage interview. Who is lying? He is the chair of the Audit Committee. All city council employees (including internal auditor) answer to the entire council and entire committee.

UPDATE II: Listen to the interview HERE from this morning. WARNING, not suitable for small children 🙂

I guess Belfrage invited Theresa and Greg on Thursday morning to discuss the robo-call and hiring of the new Internal Auditor, 8 AM.

Some observations I made while watching the meeting last night were kind of startling. While the 3 councilors that voted against Mrs. Nelson’s appointment (Brekke, Stehly & Starr) contended there were too many conflicts of interest and the process was not open and transparent. Brekke said she would have liked to see a more extensive search.

But what shocked me is how the council and city attorney, Danny Brown, blew off the conflicts as normal operating procedure. Brown referenced the state which is steeped in nepotism and conflicts and said if the state permits it (it’s legal) than it must be okay.

First off, it should be illegal. South Dakota State government gets an ‘F’ in corruption. I have often contended that is due to lack of transparency, conflicts and nepotism. But just because something is ‘legal’ doesn’t make it right, and those 3 councilors did the right thing.

There was also a relaxed attitude towards the fact that Mrs. Nelson lacked audit experience.

But one of the biggest shockers was when Neitzert said that the internal auditor works for management (the council) and NOT the citizens. He had a round about way of saying it, but you got the gist. This was disappointing, because as Stehly pointed out, ALL city employees should be working for the citizens.

Brekke made the best points all night. Not just about conflicts or finding qualified applicants, but one of her best points was about how the council should have had a consensus on this since it was their employee. In fact, the council has had a consensus on the hiring of all of their employees in recent history. The last time they did not have consensus was when they voted to fire Debra Owen. Janet pointed out that it seems when the majority of the council doesn’t want to negotiate with the minority they shut them out and move forward anyway. She said it was frustrating and made the point that when the council is this far apart on disagreeing with each other, that was the best time to talk and and work out their differences. AMEN!

UPDATE: Last night at the meeting Greg said it was urgent to hire Shana right away so she would not be in limbo for two weeks, then he says this in a press release today;

Nelson will transition into her new role over the course of the next month.

Greg made it sound like Shana needed to have an answer right away so she could transition into her new position right away. Now we hear it will take a month! I assumed she would probably be moved in by the end of the week or Monday. With the administration not thinking Shana is that important to them, you would think they would have allowed her to pack up her box of pencils, Chia pets and city plaques today. Funny how things change the next day when the dust clears.

Councilor Neitzert finally talks about the Internal Auditor nomination

With a 5:30 special meeting vote taking place this afternoon, Neitzert finally says ‘something’ about his nomination, or is this about Stehly?

“This is a shameful and disappointing display of city leadership.”In a recent press release, City Councilor Greg Neitzert responds to this weeks Audit Manager Nominee robo-calls put out by fellow council member – Theresa Stehly.  Neitzert also refers to the calls against nominee Shana Nelson, as scorched earth tactics.

I guess Neitzert is admitting Stehly is a ‘Leader’. He often uses the ‘scorched earth’ argument anytime Stehly does something radical to get the public’s attention. Did she have much of a choice? NO one from the audit committee or from council was telling anyone about the nomination and her obvious conflict of interest.

Original press release:  “While many families were celebrating Easter, they were interrupted by an unsolicited and misleading phone call (“robocall”) from Councilor Theresa Stehly intended to provoke anger and distrust within our community.  We urge citizens to hear both sides before making any judgments.

Not everyone in our community celebrates ‘Easter’. In fact pulling a Christian Religious holiday into the argument would seem to me a reverse usage of ‘Scorched Earth’ tactic. How dare people be bothered by local politics (call went out on Saturday) when they are trying to eat their hams and chocolate Easter bunnies, the shame! The Shame! I do agree to listen to both sides, because anyone with common sense will see that Mrs. Nelson has a gigantic conflict of interest.

Shana Nelson, an outstanding city employee with financial expertise, a background in accounting, budgeting, regulatory compliance and business process improvement, and extensive knowledge of city operations, is exceptionally qualified for the position of Internal Audit Manager.  That’s why the hiring committee, made up of 3 City Councilors (Neitzert, Soehl, and Starr) and one citizen with extensive audit experience UNANIMOUSLY recommended her to the City Council for appointment.

While she has a great resume, she has NO audit experience. She is also married to a city director who runs the parking division and pushed through the parking ramp downtown (that is rumored to be in limbo). Neither of those things really matter. Her conflict lies in the fact she would be in charge of auditing departments that she worked for. And while some would argue this helps her know her way around things, it also makes it much easier for her to ‘skip over’ the bad stuff. In other words, an independent auditor needs to be ‘independent’ and by coming from the administration where she actually implemented their financial software, there will be NO independence from them. An internal auditor is not supposed to be ‘cozy’ with the departments she is auditing. I’m not saying the internal auditor needs to be a total ass-pipe, but they have to be independent and willing to expose fraud and corruption regardless of who is committing it, otherwise there is NO purpose of having an internal auditor that is just going to babysit and be a hand holder. Neitzert has admitted they would use an outside auditing firm to audit the sensitive departments that Nelson would have conflicts with. Doesn’t she have a conflict with the ENTIRE city administration?!

Far from being “ram rodded”, this process has taken months to get where we are today.  An unprecedented amount of communication and involvement of the City Council took place, with the City Council agreeing on a hiring process, and all Councilors given the opportunity to review ALL of the applicants and the opportunity to interview and meet individually with the recommended candidate.  Placing this item on the agenda of the special meeting required SIX of the eight City Councilors – a SUPER MAJORITY – to sign a document approving the request.  Normally only two signatures are required to place an item on the agenda of a regular meeting.  Without those six signatures, we would not be considering this request.

This isn’t about what the council ‘knew’. This is about allowing the citizens to also vet Mrs. Nelson. The public didn’t know about her appointment until last Friday at about 3:30 PM when she showed up on the agenda. There is also NO biographical information about Mrs. Nelson. This is about informing the public, not about executive sessions the council had about her.

These scorched earth tactics are done with no regard for others, and is motivated by a win at all costs, ends justifies the means mentality.

Nobody really wins here. As I understand it, it will take 5 votes to hire Mrs. Nelson. They have the 5 votes. The real loser here is the public, because we have a majority of the council that is willing to hire someone with a blatant conflict of interest.

This could have a chilling effect in our efforts to recruit future City employees who will have to ask themselves why they should put themselves and their families through these types of antics.  This is a shameful and disappointing display of city leadership.”

Recruit city employees? You didn’t ‘recruit’ anyone. She already works for the city. The administration is actually losing a valuable employee in the financial department (and strangely they have NOT objected – and why would they, they now have an insider on the audit side). Recruiting an actual internal auditor would have taken a national search using a recruiting firm to do so, instead of the city’s HR department. Greg is right, this will have a ‘chilling’ effect on the city, because we are essentially saying our internal auditing department is NOT important while having the fox watch the hen house.

Sorry Rick, public input is our time, not yours. Figure it out.

Week after Week we have to listen to Mr. Kiley bloviate, blubber and evaluate. So when we get a chance he has to try to cut us off because of some ‘rule’ he pulled from his ass. It’s an audit meeting, Bruce is talking about audit standards (that was covered by Oksol). Rick, STFU.

From Bruce;

Here is what I was ready to say when Mr. Kiley decided to interrupt me at the April 22, 2019 Sioux Falls City Council Audit Committee meeting.

No Disrespect for the persons here or the person this board is hiring, but…

How does transferring an entrenched city employee into the internal audit department accomplish the board’s original purpose?

I have 40+ years of internal and external audit experience. In one job, I was part of an effort to save 1,000 jobs while uncovering $500 million in schemes running in 22 different scenarios. I understand auditing.

Why is this body willing to put each individual on this board in a potential legal liability by ignoring several legitimate fiduciary questions?

Why would the chosen new hire be willing to be put in a position of having to recuse from audits involving her prior work?

Why would a person accepting an audit job accept a potential conflict of interest involving a family member?

With multiple city projects being questioned and this board should be reviewing, why is this choice being considered?

A person who trained city staff on the use of a computer program is now setup to audit her own work product?

A person who gave approvals for projects in the city’s largest department now is to audit her own work product?

By ignoring the warnings, the members of the committee and others could be opened to investigations, who wants that?

The persons in charge and accomplishing proper audits should have one trait, curiosity, insatiable curiosity.

Curiosity to ask questions no one wants asked.

You can have all kinds of data but if you are part or were part of the process you are tasked with, you lose your ability to ask the simple questions. You do not ask the simple questions possibly out of embarrassment, maybe out of your need to give all the answers. You don’t have curiosity because you may know everything before the audit begins. Hard to ask the questions when you already know the answers. Since you already have all the answers and know how to find your own data, you know which file cabinet drawers should not be opened?

Only an outsider will ASK others WHY, instead of TELLING others why. There is a difference between ASKING versus TELLING answers.

As members of this Audit Committee, ask the question, “Does this process meet any standards required in any Fortune 500 company?”

As members of this Audit Committee, ask also this question, “Does this process meet any standards required in any not for profit organization?”

The two answers will be a resounding “NO”.

Citizens know of problems in city processes. How does this choice meet any recognized standard necessary to meet legal, financial and moral codes of conduct or ethics to keep citizens in believing in this government?

You are forewarned, the questions we ask are the basis for possible RICO investigations. Is this rush to transfer a potential employee to be involved in auditing her own previous work worth the wrath of future investigations?

There are too many problems and no logical answers.

Sioux Falls City Council Agenda, April 22-23, 2019

Audit Committee Meeting, 4 PM (4/22)

External Audit Reports; This is where an external auditing firm (the same one we have been using for years and years) looks at our financial statements from the previous year. This is NOT a thorough independent, forensic audit.

Public Assurance Alliance does a presentation on Trends and Risks. New director, David Fiddle-Faddle returns to the Chambers to enlighten us with his immense wisdom. Make sure the security cameras are turned off or scrubbed later.

Audit report of the Zoo. Still one of the tightest ships ran in the city. I still think the Director of the Zoo should run for Mayor.

Fill-In, and Previous Internal Auditor, Oksol is going to tell us how to measure performance out of an internal audit staff. First step; make sure you have a staff to measure.

They finish with giving Oksol a gold star for helping to fill in while looking for a new internal auditor manager. He must have been volunteering his time? Who knew?

City Council Informational, 4 PM (4/23)

March Financial Update

Overview of Spring Flood Recovery

Use of unobligated capital funds

City Council SPECIAL Meeting, 5:30 PM (4/23)

I noticed that the special council meeting is missing Public Input at the beginning. I’m not sure they can skirt public input at the beginning just because it is a special meeting. I think the new changes in state law say they must provide public input at all public meetings.

Item#3, Approval of Contracts,

Seems we are buying two new Harley’s for the SFPD. I find this interesting since the last couple of bikes we bought were NOT Harley’s (I think they were Triumphs).

Items #4-5, supplemental appropriations for the Rose/Lotta neighborhood homes. I think this will pass with full support of the council, besides some bickering about where the money is coming from.

Item #6, Motion, Appointing Shana Nelson as the new Internal Auditor Manager. As I suspected they are plucking Shana from the Finance Department where she works as a business analyst creating a conflict of interest between the administration and city council. Shana’s husband, Matt Nelson is the Director of the Parking Department. So how does she audit that department fairly? Further more, with some pending issues with the DT parking ramp, will we ever get a fair audit of the department?

Events Center Campus Book Club Meeting, 8:30 AM, Wed 4/24, Convention Center (we will see if it is filmed this time and if they have any chairs for the public)

Click to Enlarge

We need an Inspector General NOT an Internal Auditor (Guest Post, Bruce Danielson)

The Internal Audit department was established after it was discovered we had an out of control administration. The plan for establishing an Internal Audit department came about because laws were broken by city personnel with no process to make sure it could not happen again (The offenders were never charged with a crime because council chickened out, and the main offender got re-elected to a 2nd term). The framers of our government did not see a leader or employee, willing to destroy the government for the chance to make a personal buck no matter what, in the Home Rule plan they put together.

An Internal Audit department was developed to be a place to go, to verify projects were completed on the up and up. If the City Council wanted to check a contract or process, they were able to have it added to the audit schedule for the year. The Internal Audit staff was not to change the mission or the audit plan for the year. What we have learned over time is how the Internal Audit staff either changed the audit plan because the work was “too hard”, complicated or they didn’t want to do it.

What we have found since the Internal Audit office was set up, staff has never functioned as it was proposed. Internal Audit has become a place of semi-retirement with no expectation of getting any meaningful work done. Internal Audit should not be the go along, get along function as it has been for many years. The Internal Auditor staff or its function should not be feared. If the office or function being audited is on the up and up, an audit should be welcomed. If the department has no issues, they should be recognized for running a tight ship.

The Internal Auditor should never be transferred from a Sioux Falls city department staff. An Internal Auditor staff member should never be put into the position of auditing their prior office, co-workers, family or friends. To think anyone in the Internal Auditor office would be hired out of the finance or public works or city attorney office or any other office now or in the future is just plain wrongheaded and presents a huge conflict of interest.

The Internal Auditor office in Sioux Falls must be a true auditor office. It should not be led by a CPA with bookkeeper bees for staff. The Internal Auditor office could be led by an engineer with a bookkeeper and an investigator. It could be a mix of any number of people from many different types of backgrounds. Curiosity and the ability to think outside the box are probably more important than their ability to build a spreadsheet.

I firmly believe we need an Inspector General office more than a happy clappy Internal Auditor cheering on questionably legal city government actions many of us have seen over the years. The citizens need to have an office they can approach with questionably illegal issues and not have them buried in a bureaucracy, never to see the light of day.

Internal Audit should not be the resting spot of guilty consciences, it should be the blunt force that would come down on a wrong process or person because curiosity ruled the day and found a hidden issue. Finding problems and fixing them is a good thing, it shouldn’t be perceived as a ‘bad cop’. As citizens WE own the government, it’s our money. Anything we can do to save taxpayers money by fixing or streamlining processes should be the ultimate goal. If someone’s feelings are hurt in that process, maybe they need to find another job in the private sector.