Denver received sad news recently that former City Councilman Ted Hackworth passed away at home.
Ted never hesitated to tell you how he felt about something. He never hesitated to vote no if he disagreed on something. He taught me lots and I am appreciative for his good advice which he always shared on issues of significance facing Denver.
Staffers and Council members both joked about a vote being 12 to one; that was 12 to Hackworth. Ted remained active to the end in his Southwest Neighborhood association. And he had a contagious smile which lit up a room no matter how big. Beneath the gruff exterior lurked a good sense of humor and encouraged me to quote more Shakespeare. One council member asked if she could get some credit at Regis for all that Shakespeare I quoted. I told her she would have to pass the test and that was stuff that dreams are made of and not likely.
He was very pleased when I arranged to lead the battle for him to serve as President Pro Tem his final year in office. He seemed to like that honor which the council awarded him for his many years of service. Ted will be missed and his dedication to neighborhood and city will be missed as well.
Friday, November 13, 2009
The Bully Pulpit
Recently it was reported that the City will not renew its contract with Seedco, a relationship which has existed since 2006. I would like to think that this decision was made primarily due to our recent audit which exposed gross mismanagement by Seedco. On many occasions I have been asked, “What is Seedco?”
Seedco Financial Services, Inc. (Seedco Financial) is a national Community Development Financial Institution (CDFI) with more than $200 million in assets under management. Filling niche gaps along the continuum of credit from small business lending to New Market Tax Credits, Seedco Financial seeks to stimulate economic development in communities that are underserved by traditional banking institutions by providing affordable capital, hands-on technical assistance and innovative solutions to small businesses, nonprofit organizations, CDFIs and real estate developers. Seedco Financial is a wholly-controlled subsidiary of Structured Employment Economic Development Corporation (Seedco), a national nonprofit intermediary that helps low-income people and communities move toward economic prosperity.
I am pleased that the Mayor has decided not to renew the City’s contract with Seedco.
Seedco Financial Services, Inc. (Seedco Financial) is a national Community Development Financial Institution (CDFI) with more than $200 million in assets under management. Filling niche gaps along the continuum of credit from small business lending to New Market Tax Credits, Seedco Financial seeks to stimulate economic development in communities that are underserved by traditional banking institutions by providing affordable capital, hands-on technical assistance and innovative solutions to small businesses, nonprofit organizations, CDFIs and real estate developers. Seedco Financial is a wholly-controlled subsidiary of Structured Employment Economic Development Corporation (Seedco), a national nonprofit intermediary that helps low-income people and communities move toward economic prosperity.
I am pleased that the Mayor has decided not to renew the City’s contract with Seedco.
Friday, November 6, 2009
Fraud in times of Economic Stress
In a previous blog entry I mentioned to you that auditors warn that in times of economic uncertainty and downturn, auditors see an increase in cases of fraud. Why is that? I think it is because people, in an economic downturn, are even more willing to take additional risks to cut ethical corners and come up with schemes to defraud government agencies. You might recall the Association of Government Accountants' website estimates that 7% of the stimulus moneys, almost $60 billion dollars, will be lost to fraud and waste.
So it should come as no surprise to us that we read that over 100,000 people of the 1.5 million folks who have applied for the first time home owner 8,000 government tax credits have already come up with schemes to defraud the government fund accounts. Here is one way in which some have taken the risk to try to defraud the funds: simply lie about the age of the applicant. J. Russell George, Treasury Inspector General for tax administration, reported recently to Congress that 580 people seeking $4 million were under the age of 18. The youngest recipient was only 4 years old.
Linda Stiff, the IRS's deputy commissioner for services and enforcement, put it aptly when she said to the Congress folks, "any time that there is an opportunity to receive cash back, it tends to attract people that might have the intent to defraud the government." Does this news upset you as much as it does me?
I read with amusement that some governmental agencies are cutting their auditors in order to save money during the economic downturn. In a time of economic downturn, that's when you need more auditors, not less.
So it should come as no surprise to us that we read that over 100,000 people of the 1.5 million folks who have applied for the first time home owner 8,000 government tax credits have already come up with schemes to defraud the government fund accounts. Here is one way in which some have taken the risk to try to defraud the funds: simply lie about the age of the applicant. J. Russell George, Treasury Inspector General for tax administration, reported recently to Congress that 580 people seeking $4 million were under the age of 18. The youngest recipient was only 4 years old.
Linda Stiff, the IRS's deputy commissioner for services and enforcement, put it aptly when she said to the Congress folks, "any time that there is an opportunity to receive cash back, it tends to attract people that might have the intent to defraud the government." Does this news upset you as much as it does me?
I read with amusement that some governmental agencies are cutting their auditors in order to save money during the economic downturn. In a time of economic downturn, that's when you need more auditors, not less.
Tuesday, November 3, 2009
Failure should not be an option
I have just released our audit of Seedco, a company under contract to the city’s Office of Economic Development. The audit paints an ugly picture of dismal failure by this company over the three years it has been under contract. Worse, when the contract was renewed the last time, the company was chastised for its failures and promised to do better: So much for that.
Seedco was brought on-board by the city three years ago because it was claimed that loan funds previously loaned by the Office of Economic Development would be more effectively handled by this private entity with better outcomes. That has not happened. In point of fact over the last two years, OED’ loan performance far outperformed that of Seedco For instance, In 2008, OED made 47 loans for $18.1 million while Seedco only made six loans for $950,000.
The contract is once again up for renewal. Denver City Council will take this matter up next week. I don’t know what Council may do, but I do know that if I had a vote on Council, it would be a resounding NO to renewal.
They have failed to abide by the terms of the contract, seeming to treat those terms in the most flippant and cavalier manner;
They have failed to meet the performance measures stipulated in the contract, including the all-important job creation standards;
They have failed to return over $146,000 owed to the city for ten months;
They have spent tremendous sums – and what I would term highly inappropriate sums – of money on overhead, travel, and executive salaries.
I cannot be more displeased with the performance of Seedco, because the economic-generator that this loan program is supposed to be is being inhibited by Seedco’s poor performance. In these difficult times, when tight credit is negatively impacting Denver’s economy, that is performance we cannot afford.
You can view the audit here: Seedco Audit
Seedco was brought on-board by the city three years ago because it was claimed that loan funds previously loaned by the Office of Economic Development would be more effectively handled by this private entity with better outcomes. That has not happened. In point of fact over the last two years, OED’ loan performance far outperformed that of Seedco For instance, In 2008, OED made 47 loans for $18.1 million while Seedco only made six loans for $950,000.
The contract is once again up for renewal. Denver City Council will take this matter up next week. I don’t know what Council may do, but I do know that if I had a vote on Council, it would be a resounding NO to renewal.
They have failed to abide by the terms of the contract, seeming to treat those terms in the most flippant and cavalier manner;
They have failed to meet the performance measures stipulated in the contract, including the all-important job creation standards;
They have failed to return over $146,000 owed to the city for ten months;
They have spent tremendous sums – and what I would term highly inappropriate sums – of money on overhead, travel, and executive salaries.
I cannot be more displeased with the performance of Seedco, because the economic-generator that this loan program is supposed to be is being inhibited by Seedco’s poor performance. In these difficult times, when tight credit is negatively impacting Denver’s economy, that is performance we cannot afford.
You can view the audit here: Seedco Audit
Monday, November 2, 2009
Debt
David M. Walker, former Comptroller General of the United States, visited the Denver Auditor's Office two years ago on a swing through Colorado. Walker talked to the Internal Audit Section of the office. He has, since last year, served as the President and CEO of the Peter G. Peterson Foundation. The foundation tries to alert Americans to the looming crisis of our growing debt.
I was pleased to hear Mr. Walker again at the Fiscal Wake-Up Tour at the University of Denver last Thursday evening, October 22. Walker hit similar haunting themes to those he brought up when he spoke to our office two years ago. Slide number one of his presentation told the whole story: "Saving Our Future Requires Tough Choices Today."
Walker pointed out three important points to a mixed crowd of older retirees and younger students. He shared with the audience that in 1968, mandatory spending programs were at 28% with discretionary programs at 66%. In 2008, mandatory programs were at 53% and discretionary spending programs were now at 39%.
The second point, always a Halloween shocker, the burden per capita of the debt in the United States: $184,000 and growing as you read this entry on my blog.
The third horrifying specter of his presentation showed how much foreign holding of US debt has risen. In 1990 our foreign debt holders was at19%. In 2009, it has risen to a ghoulish 49%. Does this scare you? No wonder the Obama White House timidly decided not welcome the Noel Winner, the Dalai Lama to the white house for tea. I guess the White House has decided "we must not offend the US banker." If Bush had done that the Democrats would have screamed like banshees and wailed like Halloween hob goblins.
I was not surprised that the audience unanimously wrote off the Senate and Congress as lacking any courage to do anything to deal with the rising debt. Like Jacob Marley's ghost, you could feel the anger rising at Congress in the DU Cable Center as the speakers continued with their description of how we got into this mess. It was clear to all that Congress will make no "tough choice" on this issue.
One older man to whom I spoke at the end of the raucous, but excellent and civil event told me: "Obama can keep the $250 he is planning to send me this year." He was dressed in a tweed suit with a warm vest. I told him that if he ever got the payment, he could endorse it and send it back to the treasury to lower the deficit. " And they'll just waste it like they did with all the money I have sent them before," he smiled back at me. He told me he was glad to see at least one elected official there at the meeting. I imagine feelings are different among older people in the neighborhood where I live in North Denver. Older people in that area are trying to decide between food and prescriptions. At the end of the meeting, Walker and the other speakers were swamped by members of the crowd. Walker told me he remembered coming to our office and I invited him to come back some time in his new roll of Paul Revere for the scary fiscal wake-up call.
Walker's final slide told the audience why he is so deeply concerned about this issue of federal debt: the slide showed a picture of the three Walker grandchildren. I hope you will look at pictures of your children and grandchildren and for their sake, get involved and focus on this "moral" issue. Type Peter G. Peterson Foundation on the search line of your Internet service or simply pgpf.org and the web pages lay out the whole sad story.
I was pleased to hear Mr. Walker again at the Fiscal Wake-Up Tour at the University of Denver last Thursday evening, October 22. Walker hit similar haunting themes to those he brought up when he spoke to our office two years ago. Slide number one of his presentation told the whole story: "Saving Our Future Requires Tough Choices Today."
Walker pointed out three important points to a mixed crowd of older retirees and younger students. He shared with the audience that in 1968, mandatory spending programs were at 28% with discretionary programs at 66%. In 2008, mandatory programs were at 53% and discretionary spending programs were now at 39%.
The second point, always a Halloween shocker, the burden per capita of the debt in the United States: $184,000 and growing as you read this entry on my blog.
The third horrifying specter of his presentation showed how much foreign holding of US debt has risen. In 1990 our foreign debt holders was at19%. In 2009, it has risen to a ghoulish 49%. Does this scare you? No wonder the Obama White House timidly decided not welcome the Noel Winner, the Dalai Lama to the white house for tea. I guess the White House has decided "we must not offend the US banker." If Bush had done that the Democrats would have screamed like banshees and wailed like Halloween hob goblins.
I was not surprised that the audience unanimously wrote off the Senate and Congress as lacking any courage to do anything to deal with the rising debt. Like Jacob Marley's ghost, you could feel the anger rising at Congress in the DU Cable Center as the speakers continued with their description of how we got into this mess. It was clear to all that Congress will make no "tough choice" on this issue.
One older man to whom I spoke at the end of the raucous, but excellent and civil event told me: "Obama can keep the $250 he is planning to send me this year." He was dressed in a tweed suit with a warm vest. I told him that if he ever got the payment, he could endorse it and send it back to the treasury to lower the deficit. " And they'll just waste it like they did with all the money I have sent them before," he smiled back at me. He told me he was glad to see at least one elected official there at the meeting. I imagine feelings are different among older people in the neighborhood where I live in North Denver. Older people in that area are trying to decide between food and prescriptions. At the end of the meeting, Walker and the other speakers were swamped by members of the crowd. Walker told me he remembered coming to our office and I invited him to come back some time in his new roll of Paul Revere for the scary fiscal wake-up call.
Walker's final slide told the audience why he is so deeply concerned about this issue of federal debt: the slide showed a picture of the three Walker grandchildren. I hope you will look at pictures of your children and grandchildren and for their sake, get involved and focus on this "moral" issue. Type Peter G. Peterson Foundation on the search line of your Internet service or simply pgpf.org and the web pages lay out the whole sad story.
Friday, October 30, 2009
A Celtic Halloween
November 1 is the Celtic feast of Samhain. Samhain, Gaelic for "summer's end," was the most important of the ancient Celtic feasts.
The Celts honored the opposing balance of intertwining forces of existence: darkness and light, night and day, cold and heat, death and life. The Celtic year was divided into two seasons: the light and the dark, celebrating the light at Beltane on May 1st and the dark at Samhain on November 1st. Therefore, the Feast of Samhain marks one of the two great doorways of the Celtic year. Some believe that Samhain was the more important festival, since it marked the beginning of a new dark-light cycle. The Celts observed time as proceeding from darkness to light because they understood that in dark silence comes whisperings of new beginnings, the stirring of the seed below the ground. Therefore, the Celtic year began with the season of An Geamhradh, the dark Celtic winter, and ended with Am Foghar, the Celtic harvest. The Celtic day began at dusk, the beginning of the dark and cold night, and ended the following dusk, the end of a day of light and warmth. Since dusk is the beginning of the Celtic day, Samhain begins at dusk on October 31. Samhain marks the beginning of An Geamhradh as well as the New Year.
Chant for Samhain
A year of beauty. A year of plenty. A year of planting. A year of harvest.
A year of forests. A year of healing. A year of vision. A year of passion.
A year of rebirth. A year of rebirth. This year may we renew the earth.
Let it begin with each step we take. Let it begin with each change we make.
Let it begin with each chain we break. And let it begin every time we awake.
The Celts honored the opposing balance of intertwining forces of existence: darkness and light, night and day, cold and heat, death and life. The Celtic year was divided into two seasons: the light and the dark, celebrating the light at Beltane on May 1st and the dark at Samhain on November 1st. Therefore, the Feast of Samhain marks one of the two great doorways of the Celtic year. Some believe that Samhain was the more important festival, since it marked the beginning of a new dark-light cycle. The Celts observed time as proceeding from darkness to light because they understood that in dark silence comes whisperings of new beginnings, the stirring of the seed below the ground. Therefore, the Celtic year began with the season of An Geamhradh, the dark Celtic winter, and ended with Am Foghar, the Celtic harvest. The Celtic day began at dusk, the beginning of the dark and cold night, and ended the following dusk, the end of a day of light and warmth. Since dusk is the beginning of the Celtic day, Samhain begins at dusk on October 31. Samhain marks the beginning of An Geamhradh as well as the New Year.
Chant for Samhain
A year of beauty. A year of plenty. A year of planting. A year of harvest.
A year of forests. A year of healing. A year of vision. A year of passion.
A year of rebirth. A year of rebirth. This year may we renew the earth.
Let it begin with each step we take. Let it begin with each change we make.
Let it begin with each chain we break. And let it begin every time we awake.
Wednesday, October 28, 2009
2010 Audit Plan
I hope everyone will check the Auditor's 2010 Audit Plan posted on the Auditor's website.
Charter language approved by voters in 2007 requires the Auditor to come up with an annual audit plan, a collaborative audit plan, a collegial audit plan. The charter requires the Auditor to consult with the mayor and council on issues which need to be audited in Denver. This language arose from the city's tradition that ambitious auditors in Denver find in the auditor's office a fertile nesting ground for future mayoral plans.
Kip Memmott Director of Internal Audit in the Denver Auditor's Office and I have broadly interpreted the charter language to be more inclusive than just found in the written words: we annually meet with department heads as well. For two years now, we have shared the outline of our annual audit plans with department heads and staffs in their offices and have asked if they have any input for the plan. We have received many excellent suggestions for audits from these meetings. I think you will appreciate the emphasis on public safety and internal financial controls highlighted in the 2010 plan. Taxpayers will appreciate the detailed calculations of how many hours our auditors have allocated per audit on various issues and departments. And we have set aside enough hours of audit time to allow for emergencies which may arise in the city in need of attention. In my view visiting with department heads continues to help build trust at the city in that many agency heads feel negative about any audit pending around their departments.
These insightful revelations in the 2010 Audit Plan reflect a new sense of accountability and transparency which our recent peer review appreciated in their recent analysis of our office operations. So let me know what you think of the 2010 Plan and share your thoughts as to what should be audited in Denver. Mike Licht, former Denver Auditor who ran for mayor, had a great motto in his campaign: "Everyone is an Auditor." When asked what that meant Mike said "If you pay your parking bill at the airport and you don't get a receipt, report it to the auditor's office." Not getting a receipt for money paid at any city agency shows a lack of proper internal controls and can lead to possible fraud.
And Mike is right, and every one can offer suggestions to the audit plan.
Charter language approved by voters in 2007 requires the Auditor to come up with an annual audit plan, a collaborative audit plan, a collegial audit plan. The charter requires the Auditor to consult with the mayor and council on issues which need to be audited in Denver. This language arose from the city's tradition that ambitious auditors in Denver find in the auditor's office a fertile nesting ground for future mayoral plans.
Kip Memmott Director of Internal Audit in the Denver Auditor's Office and I have broadly interpreted the charter language to be more inclusive than just found in the written words: we annually meet with department heads as well. For two years now, we have shared the outline of our annual audit plans with department heads and staffs in their offices and have asked if they have any input for the plan. We have received many excellent suggestions for audits from these meetings. I think you will appreciate the emphasis on public safety and internal financial controls highlighted in the 2010 plan. Taxpayers will appreciate the detailed calculations of how many hours our auditors have allocated per audit on various issues and departments. And we have set aside enough hours of audit time to allow for emergencies which may arise in the city in need of attention. In my view visiting with department heads continues to help build trust at the city in that many agency heads feel negative about any audit pending around their departments.
These insightful revelations in the 2010 Audit Plan reflect a new sense of accountability and transparency which our recent peer review appreciated in their recent analysis of our office operations. So let me know what you think of the 2010 Plan and share your thoughts as to what should be audited in Denver. Mike Licht, former Denver Auditor who ran for mayor, had a great motto in his campaign: "Everyone is an Auditor." When asked what that meant Mike said "If you pay your parking bill at the airport and you don't get a receipt, report it to the auditor's office." Not getting a receipt for money paid at any city agency shows a lack of proper internal controls and can lead to possible fraud.
And Mike is right, and every one can offer suggestions to the audit plan.
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