Dust-up shows a big hole in budget

An article in Wednesday’s edition of The Press, titled “Budget Dust-Up,” covers a dispute concerning the “CAFR” (Comprehensive Annual Financial Report) and the role of the Annual Budget in that report. Unfortunately, the positions of our elected officials, as reported, are disturbing.

It is claimed government accounting is too complex for citizens to understand, even if they are trained accountants. Commissioner Eberlein is quoted as saying, “government accounting is unlike most businesses due to revenue carryover figures and such.”

So just be a good citizen and let those who know better handle things. This is the fallback position of those who don’t understand what they are doing, but are doing things the way they have always been done. How effective is this approach? How many embezzlers have been unearthed in governmental and nonprofit agencies in the area in the last few years? How many years did they get away with their illegal activities? How many more can we expect to find in the future if we continue to follow the same practices which led to their long undetected mishandling of our money?

I have met Jim Brannon and Marc Eberlein, but their quotes in this article cause me great concern. First, revenue carryover figures are very simple in concept. What money the government collects this year (revenue), which it doesn’t spend this year, can be spent next year (carryover). Title 31, Chapter 16, Section 31-1605A: “Counties may accumulate fund balances at the end of a fiscal year and carry over such fund balances into the ensuing fiscal year sufficient to achieve or maintain county operations on a cash basis.” In other words, money left over at the end of the year can be spent next year. Is this really beyond understanding of citizens? I think not!

But more importantly, governments are not intended to spend money which has not been authorized. For governments, the budget, once approved, is the legal authorization to spend money. Any expenditure in excess of the budget is not legally authorized.

To this end, standard practice is to spend the money and then amend or correct the budget after the close of the year to authorize the expenditure. This would be like the bank, instead of waiting for your check, takes money out of your checking account because it’s for a good cause and they know you will approve it later. Why care? Care because this type of procedure is the slack in which embezzlers can operate undetected and get away with their actions for years before they are finally caught.

As County Clerk, Jim Brannon is in charge of budgeting, writing checks, accounting and internal auditing. Effectively, he is the Chief Financial Officer and Treasurer rolled into one. He is the one to protect our money. It is his responsibility to implement systems which make certain that every check his department writes is properly authorized. It would appear that the Department is writing unauthorized checks or there would be no budget overruns. Simply put, he does not seem to be protecting the citizens who elected him to handle this important responsibility.

The Clerk should understand accounting. The Clerk should read and understand the pronouncements of the Government Accounting Standards Board and other authorities. The Clerk should read and understand the Idaho State Statutes which affect county operations, such as Title 31, Chapter 16. If not, he should replace unqualified subordinates, hired because of their support of the Party instead of their knowledge, and rely on his knowledgeable employees if they have not been too steeped in the “it’s the way it’s always been done” approach. Systems need to be designed and implemented which require proper authorization before spending money, not after, even though “it’s the way it’s always been done.”

As mom always said, “Just because everyone else jumps off a cliff is no reason for you to jump too.” I’m sorry to say, do the job right or hire someone qualified; step aside and let them do the job. Please protect our money, make certain that every check is authorized before it is written, and stop making excuses for inadequate controls. Please!

- • •

Dave Botting, B.Sc., Accounting; MBA; has nearly 40 years experience in Management Accounting, including fund accounting, and 23 years as Chief Financial Officer and Treasurer of international manufacturing companies.