Audit of NC Funding Program

Message from General Manager BongHwan (BH) Kim
General Manager Kim Response to Controller Greuel
Audit of NC Funding Program

I would like to thank Controller Greuel for conducting, at my request, an audit of the Neighborhood Council (NC) Funding Program. This Program has grown into one of the most important resources for empowering neighborhoods to be more involved with their local NCs and city government. This program helps broaden NC partnerships while helping to improve city services and the quality of community life.

The audit rightly points out that management was lax in enforcing existing policies and procedures. Some of the findings should have been acted upon earlier. As the General Manager of this Department, I am responsible for ensuring that the Program is running properly. I have recently shifted management responsibilities over the Funding Program and will be working very closely with my management team to set and achieve clear and measurable performance benchmarks for improvements.

A parallel problem is that the underlying system of checks and balances is fraught with problems. Unless the system is fixed, the Program will continue to be subject to criticism and scrutiny from our elected officials and the media. We will actively seek the involvement of several key City Departments AND Neighborhood Council Boards to properly design and implement user friendly systems which also meet fund management standards for our precious tax dollars.

The Department took the initiative to request this audit because we felt that the 2006 audit, conducted by then Controller Chick, didn't focus enough on the unique needs of this Program. We were seeking to establish a starting point so that we could work in collaboration with the Office of the Controller and other City Departments responsible for the fiscal management of public tax dollars in addressing a Program which has been under-resourced and inconsistently managed since its inception in 2002. Different interpretations and applications of policies and accounting practices, management and staff turnover, and the current City budget crisis are the greatest challenges facing the Department as we seek to re-design the entire system. Developing a financial management system which must balance the needs of a volunteer driven system, which is at the heart of the NCs, with existing financial management systems intended for City workers as the principle end users exists no where else in the city. Successfully re-designing such a system will require the cooperation of all relevant City Departments, NC leaders, and elected officials.

To be clear - the Controller's audit has no bearing on the outstanding issue of roll over balances. The Department is solely responsible for this task. In a prior E-Blast, I had notified NCs to submit an adjusted budget which includes figures for the roll over balances based on the NC's financial records so that they may begin to tap those funds - subject to our approval. To date, 81 NCs have submitted budgets including roll over balances. In the meantime, I have instructed the accounting staff to embark on a complete forensic accounting for each and every NC since Program inception. It is estimated that it will take existing Department staff 2 months (including overtime) to complete this major task. If you are interested in volunteering to help our staff with reconciliations, please contact Jacqueline Mendez @ Jacqueline.Mendez@lacity.org.

We have recently convened a group of NC Treasurers to work with us on a number of projects including an NC Treasurer and Mentoring Program to assist in the development and standardization of policies, processes, budgets, documents and communication protocols with NC Treasurers. We will be announcing shortly, new policies and procedures around such things as standardized budgets and tracking, fingerprinting of Treasurers, reduction or elimination of petty cash, returning incomplete payment requests, required Board approval of expenditures (including consequences), etc. These changes are designed to both improve accountability and reduce staff workload. This will ensure that the Program can be properly managed with fewer resources.

Despite the severe budget challenges, I have prioritized making the necessary changes to the NC Funding Program. With a solid system in place, we can pursue raising additional private funds to continue supporting the great work that is going on in neighborhoods throughout the City.

Please click here to view audit.