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For the second year in a row, we have seen a fundamental failure in leadership, management, and duty in the fiduciary responsibilities of Salisbury City Government to the citizens of this small town on Maryland’s Eastern Shore.
I am of course, talking about the recently completed audit of city finances presented to the City Council.
This audit is very important. First, it is required by State Law, and it is required to be timely. The audit (for at least two years in a row) has been substantially and materially late. The current President of the City Council, Louise Smith, even ran on a platform of accountability of delivering the audit on time.
So much for campaign promises.
Second, the audit should be able to present a clear picture to citizens and taxpayers the financial health of the City, its current account balances, and a snapshot of how well City government is performing in its duty to raise revenues responsibility, and expend those revenues responsibly.
Third, the audit provides a capable control and evaluation of the City Finance department to make sure that those employees are properly trained, doing their jobs both legally and properly, and that any outstanding monies owed to the City – fees, fines, taxes etc. – are being collected and recorded on a timely basis.
The City of Salisbury has failed dramatically on all these counts. One might be inclined to argue away these failures by saying that Salisbury is a small city with limited resources. Or that Salisbury’s leadership is doing the best they can with what they have. Unfortunately, the evidence does not lead us in that direction. In fact, it leads us in the opposite direction: that the leadership of the City of Salisbury and most notably, the Mayor of Salisbury, display a willful indifference to the law in managing city finances and reporting on that management.
In fact, that willful indifference is so great that the Mayor has resorted to the typical scoundrel move: first throwing HER employees “under the bus”, then “accepting full responsibility”.
What is “accepting full responsibility”, Mayor Tilghman? Do the citizens of Salisbury get to tie you to the Captain Henry Wirz sign in front of the Old Courthouse and flog you with a whip? Do the Citizens of Salisbury get to tar and feather you? Do you get your hair chopped off like the female Nazi collaborators in Holland and France? Do you get branded with a hot iron shaped in the letter “L” for “Late” or “Liar” or “Loser”?
No, unfortunately, there is no responsibility to accept here (save the ballot box). No resignation forthcoming. No prosecutions. That his why she is so willing to accept that which will never come.
She also knows that her Step-N-Fetch-Its on the City Council won’t do anything to her, either. Terry Cohen and Debbie Campbell will just get gaveled down by Grupenfuhrer Smith if they try.
But this problem is a failure of leadership and management that starts at the top, and the top is Mayor Barrie Parson Tilghman.
It is unacceptable and pathetic to blame the lateness of the audit AND the failure to do monthly reconciliations on the inexperience of the staff. The city’s finances are managed by Ms. Pam Oland, who is a Certified Public Accountant. Certified is an important word, because in legal parlance, that means LICENSED. To be a Certified Public Account, in addition to your licensing credentials, you also need a four-year degree in an appropriate discipline (i.e., Finance or Accounting) and you must take part in continuing education programs to keep your licensure intact.
Mayor Tilghman hired Ms. Oland away from Perdue Farms to head up this important department, so Oland’s failures are Tilghman’s failures. And if Ms. Oland does not understand or appreciate the legal requirements of the city’s financial management AND utilizing the Generally Accepted Account Principles (GAAP), she should take the fall and fast.
This is the second year (at least) that the management letter from the auditors has raised the issue of timely reconciliation. I am not an accountant (and I do not play one on TV), but I do know that timely reconciliation of debits and credits is a fundamental precept of sound financial management. Most of us reconcile our checkbook balances on at least a monthly basis. Why should any employee in the city’s finance department assume the same would not be for a multi-million dollar government budget?
Once upon a time, I was willing to give the city the benefit of the doubt, and questioned the systems they had in place for account reconciliation. It is clear that the benefit of the doubt was severely misplaced. Continuing to use substandard systems – both in terms of process and information technology – is a willful indifference to the law.
The budget of the City of Salisbury is not that big. Have you people never heard of Quickbooks?
Every business in the City of Salisbury routinely conducts both month-end and year-end closing processes to reconcile their accounts. Why can’t the city? The process is not hard. The goal is to balance debits and credits. It’s been a long time since I took Accounting I, but I believe the Accounting Equation is still:
assets = liabilities + owners equity
How hard can it possibly be to reconcile the ledger at the end of each month?
The short answer is that it is not that hard. That is why I chose the phrase “willful indifference”. It’s not negligence. It’s not incompetence. It is a willful indifference to the law and to GAAP perpetrated by Pam Oland, the Mayor of Salisbury, and the City Council. It is a willful indifference that, if these were employees of a public company, would have them before a Grand Jury for fraud, deceit, and running an illegal enterprise. Not to mention the violations of Sarbanes-Oxley and the Securities and Exchange Commission Act of 1933.
What to do then?
That will be the subject of another post.