Dear Russ,
Last year, because of the conflict between the mayor and the city council over the budget, I looked into the issues that seemed to bother one side or the other. Without finding fault with either side, I found that better laws providing transparency and confidentiality in the audit process and a law that would guarantee accountability in fiscal matters would help resolve the conflict between the Mayor and City Council and would provide better information to the public.
As a State Legislator, I proposed a GAAP (Generally Accepted Accounting Principles) bill and later joined with Republican State Senator Travis Holdman to advocate his bill, a better version, not only mandating GAAP, but also internal fiscal controls for government and legislated improvements in the audit process.
Why GAAP? Because through a method of having to record not only what the revenue is when it comes in and the expenses when they go out, GAAP requires the bookkeeper to record those accounts payables that add up from one time period to another and are still liable for us to pay.
GAAP would require that if a Mayor is going to claim that there is an $800,000 positive balance in the General Fund in the month of June, 2015, the Mayor would also have to note in the controller’s books that there is a liability to the General Fund of more than $3.7 million in unpaid bills to the surgeons and physicians.
These new laws could not come soon enough for Evansville.
Transparency is so lacking in the Mayor’s Administration that there is reason to worry about the future of our fiscal health.
There are questions that need to be answered.
1) How does the Mayor and the Controller explain the $800,000 balance to the good in the General Fund mentioned above?
2) This situation with the health insurance fund is aggravated by the fact that in both May and June of this year not one nickel was moved from the General Fund to the health insurance account to pay these and other health care bills. This was not the case the same time last year when $4 million was moved to the health insurance account to pay bills in the same months. We all know that health care costs are not going down. Why this year the total moved from the General Fund to the health insurance account is ZERO for May and June, when it was $4 million last year?
3) And, why at the same time would the administration charge the Utility Department for health insurance for those months of May and June of this year, 2015 and not charge the General Fund, as above? Is it because it is easier for the Utility Department to run to the IURC and request a rate increase to property owners already burdened by bills they can’t afford? Is it because the administration needed to show a positive balance in the General Fund, the supposed $800,000, a balance that now is at best misleading?
Instituting an accrual method of accounting like GAAP will tell the real story about our finances, as the accrual method requires you to enter revenue when earned and expenses when occurred and liabilities when they exist. When the City requested the advance of $2.5 million from the Water Department to make the City appear in the black the end of 2014, this would have been noted as a liability for the General Fund because it was 2015 monies advanced in 2014 and so taken from use in 2015. It should have been paid back before the end of 2014.
I am asking, Russ, that the administration respond to these simple questions. As we approach the budget hearings, without a clear understanding where this city is as relates to stability and a reversion of the downward trend in monies the start of every year, in monies available for expenses and monies in revenue that are reasonably projected, this administration is going to lead the City Council and the public down a rosy path of further reckless spending.
If you have any questions , please contact me at 812-568-9505
Respectfully,
Gail Riecken, Candidate, Mayor of Evansville
cc. Mayor Lloyd Winnecke
Evansville City Council
Evansville Press Corp.
Don’t forget that at one time. then Mayor Russ Baby, when asked what he would be doing if he wasn’t Mayor replied (and I paraphrase): “Why I’d be working for a big time CPA firm making more than what this Mayor gig pays and raking in the big bucks.” Yep, we saw how his gig in the private sector worked out and the citizens of Evansville have to put up with this political hack who probably can’t balance his own checkbook.
My sources tell me that Mr. Lloyd spent $ 200,000 or so with the CPA firm, Umbaugh and Associates, exploring moving to a full-blown GAAP system, even calling on that beefcake Big Dan to evangelize to the City Council for such a change. I heard that was going to be a ruse for why they couldn’t balance the books in 2012: not only changing to a new computer system (old excuse), but now a whole new way of accounting (new excuse). They ended up just twisting the Guv’s arm.
So If Mr. Lloyd has spent $ 200,000 researching such a move, he didn’t understand the principle of recognizing unpaid bills ? Really ? Ms. Riecken should call for his immediate resignation . . . actually, skip that, Russ Lloyd is giving her plenty of “material” for the election !
Great questions, that there are simple answers to. They won’t be answered by the Winnecke minions, because it would be political suicide.
I think my post from the Is It True for today is pertinent for this thread, so I am reposting here.
Following the stock market crash of 1929, the U.S. government sought ways to regulate the practices of publicly traded companies and other major market participants. Authority to set standards on accounting practices was granted to the Securities and Exchange Commission (SEC). The SEC decided to delegate this responsibility to the private sector auditing community, and in 1939, the American Institute of Accountants (precursor to the American Institute of Certified Public Accountants) created the Committee on Accounting Procedure (CAP).
CAP was replaced by the Accounting Principles Board (APB) 20 years later. The APB began issuing opinions about major accounting topics to be adopted by business accountants, which could then be imposed on publicly traded companies by the SEC. In 1973, the APB gave way to the Financial Accounting Standards Board (FASB).
The FASB has been the major policymaking body about acceptable accounting practices ever since. Other governmental and non-governmental organizations influence FASB decisions, but the FASB is responsible for issuing opinions and rendering judgments. The collective decisions passed down from the APB and FASB form the generally accepted accounting principles (GAAP).
GAAP represent objectives and guidelines for financial statements and reporting calculations. There are three major sets of rules covered in GAAP: basic accounting principles and guidelines, detailed standards of the FASB and APB, and generally accepted industry practices.
Within the confines established by GAAP, auditors attempt to establish uniformity among the financial reports of publicly traded companies, although private companies often use GAAP as well. Through GAAP, investors can more easily compare and understand the financial health of different businesses. This uniformity also has ancillary benefits for regulators, lenders, corporate managers and the accounting community.
So if GAAP was first designed and released in the late 1940’s and early 1950’s, why in the hell is Evansville not already using it? The vast majority of corporate entities have used GAAP for decades. If Evansville had been using GAAP none of the current financial shenanigans would be happening.
At least Mr Lloyd is staying here and facing the music and not running away to Illinois.
Dear Gail,
We have supported you unconditionally as a State Representative and you have supported us with the same. We ask that you tell your out of town political advisors to extend the same unconditional respect to us. We take pride in calling Southern Indiana our Home. Democracy means you have a right to have your voice heard. Currently in your political arena our voice is falling on tainted deaf ears. What is motivating this is transparent. Please stop this insane rhetoric for the sake of the working families that got you to the political platform you are on today.
Failing that please let me extend my unconditional respect for your blather.
Ahh ha ha ha. ÅŒÅÅ ho ho ho.
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