I was a member of a citizens’ group that requested an open records review of the Development Authority of Peachtree City (DAPC) on Oct. 17, 2011. Having worked in banking and finance for most of my professional career, I share accounts’ and auditors’ concerns for strong internal financial controls which are essential for any organization to prevent fraud, waste and abuse.
In the Peachtree City Council meeting discussion surrounding the motion to disband DAPC, several comments were made about DAPC members buying meals for themselves, using Authority funds.
The records we reviewed did show that meals had been purchased for DAPC members (and that the business purpose did not seem to be well documented). However, our group did not feel that the dollar amounts were material, or even unusual, since business meals seem to be a reasonable expense area for an entity charged with building relationships.
Unfortunately, the fundamental question, which could not be answered by anyone during our review, was, “Were these meals for DAPC members allowable?” The DAPC should have had a policy about how much, when and under what circumstances taxpayer funds could be used for personal meals.
Governmental accounting standards require that this kind of question be addressed in a clearly accessible, documented standard operating procedure (generically referred to as internal controls documentation).
A more telling internal control problem, in our opinion, was the lack of documented procurement procedure. What was the DAPC allowed to purchase, and how? For example, was a bidding process to be used for purchases over a certain amount; and who was responsible for approving such purchases?
In governments (and most businesses), procurement policy is considered basic block and tackling for internal controls. Procurement rules should always be understood and clearly defined, since this is one of the riskiest areas with respect to fraud.
Because procurement policies are so ubiquitous and fairly generic, they are easy to establish and document (that is, written down, so staff can find and follow them).
It would have been quite easy for the DAPC to have adopted the Peachtree City Procurement Policy, with minimal adjustments, but it seems that they did not.
In our review of the DAPC, it was the lack of controls, or maybe just the lack of understanding that such controls existed (if they did), that was troublesome.
I should digress here (and perhaps should have stated at the beginning of this commentary) that the volunteers of the DAPC, and their efforts, cannot be praised enough. The mission of improving relationships with the business community and of integrating their participation in the creation of cohesive development plans is an essential one.
Further, the servant spirit exemplified in all of the hard work accomplished by members of the DAPC is worthy of praise and imitation.
But what corporate structure should the harnessing of volunteer efforts and the development of community planning take? Can the essential mission of the DAPC not be coordinated by professionals, with direct participation of the PTC Council and volunteers?
The discussion of individual effort was never the question for the concerned citizens supporting the dissolution of the DAPC. Rather, the fundamental concerns to us related to financial controls (or perceived lack thereof).
In fact, our greatest concern about the DAPC has not yet been mentioned, namely, bonding authority.
Council members arguing for the continuation of the DAPC mentioned BONDING authority no less than four times. Some on the PTC Council felt it would have been useful to have a volunteer organization, even with its admitted weak understanding of internal controls, issue bonds.
Many readers may recall that Peachtree City recently had to pay off the last bond issuance made by the DAPC, despite promises made when the bonds were issued that Peachtree City would not be responsible for the debt.
It seems that some of our council members will do anything to get more spending money, regardless of the risks.
Fortunately, three of our council members understood the financial risks to Peachtree City, and avoided the temptation, by dissolving the DAPC. (Council members had other reasons for their decision to eliminate the DAPC in addition to the issues of financial risk.)
In closing, I do wish to reiterate the statement that all volunteers of the former DAPC should be thanked and respected for their efforts to improve our city. Also, the original mission of the DAPC is important, and should be continued, albeit in a more coordinated, less financially risky fashion.
I hope that the talents and energies of the folks involved in the former DAPC will be utilized by the city in its new, professionally managed economic development unit.
Scott Austensen
Peachtree City, Ga.
