In a bold act of *disclosure* this past Friday afternoon, at 4:30pm, State Treasurer Chip Flowers released his so-called “definitive and final report” on the problems his Agency has had with one employee in using her credit card in accordance with State regulations. This is a great example of the Friday afternoon data dump — in which you hope that members of the media won’t pay much attention and print your spin on this item. The Treasurer’s “report” was dumped so late on Friday afternoon, that the press release that came with this thing didn’t even get posted to the website yet. But perhaps this report was rushed out in an attempt to counterweight the News Journal article today that provides a big window into how mismanaged the expenses on Ms. Erika Benner’s state-issued credit card were.
Anyone with a Corporate Credit Card has been given some authority to spend on behalf of that organization. That spending almost always comes with a bunch of rules governing how and when the card gets used. Any manager who has any budget accountability checks that spending to 1) make sure the spending is within budget and 2) make sure that the spending (and the card) is used in accordance with policy.
In the Treasurer’s office, that spending was reviewed by someone with no budget responsibility. According to his report (this is Treasury Official A), this person was reconciling (not approving) the statements and receipts that came to his or her desk. Others were responsible to make sure that this information was correctly coded so it showed up properly in expenditures — but not approving. So who was responsible for approving the expenditures that were submitted? Approval of expenditures — meaning that someone who had to be accountable for that budget said OK to the spending — is completely missing. Unless I missed something in this self-serving bit of word salad. I did a quick survey of people I know who have State credit cards and so far all of them tell me that an immediate supervisor officially approves those expenditures OR there is a Comptroller or budget-responsible person who does the approval. This isn’t a proper survey, of course, but this is pretty similar to how this is handled in every corporation I’ve ever worked for.
So while this Treasurer keeps fighting to make decisions on his own regarding putting Delaware taxpayer funds at greater risk, we get — pretty much in his own words — that this Treasurer has no checks and balances on how his own budget gets spent. He is relying on coordinators and others to do the actual accounting — but in the case of these credit cards, no one in that agency seems to actually approve these expenses. A supervisor who has to review these statements before they got to the “reconciler” would have to specifically say Yes or No to expenditures AND would have been in the position of seeing these personal charges first hand. Then the supervisor would have had the responsibility of dealing with this employee who could not seem to use her credit card properly well before any of this got to the newspaper. And who was Ms. Benner’s supervisor? Why, Mr. Chip Flowers, whose report blames everyone else but him for the breakdown in what is a pretty routine bit of budget management. Yet this basic bit of line management is disavowed by Chip as the responsibility of the Division of Accounting.
As it relates to the Credit Card Program, the Treasury believes that Section 8304 is clear. The Division of Accounting is legally required to reject all statements which do not conform to the state’s financial controls (including controls prescribed in the accounting manual drafted by the Division of Accounting). Further, in the event of an improper financial transaction, the Division of Accounting has a duty to report the matter to the General Assembly, the Director of the Office of Management and Budget and the Attorney General. The law does not contain any exceptions. Stated simply, if a transaction under the Credit Card Program is not compliant with the program’s rules and regulations, in order to protect taxpayer funds, under Section 8304, the Division of Accounting has a legal obligation to report the noncompliant transaction to the aforementioned parties immediately.
The first line of financial control is always the supervisor with responsbility over this budget. If Chip can’t oversee the spending of his own employees, why do we think he’s going to do any better at investing our money?
And a quick couple of comments about this report.
- Seriously? Really? This is supposed to reassure taxpayers about your management capabilities?
- There’s no real sunshine unless names are named. Maybe the merit rules say otherwise, but there is little to trust when no one can tell if these people are even real.
- The names that *are* named are the ones that Flowers is beefing with here — Tom Cook and Kristopher Knight.
- At every single opportunity this thing blames everyone except for the person who should have been approving Ms. Benner’s card expenditures in the first place.
Today’s NJ adds some information that doesn’t come from the Treasurer’s “final and definitive report”:
Benner now has repaid the state a total of $6,051 in charges, according to an Aug. 30 memo issued by the director of the state’s Division of Accounting. Flowers did not disclose those additional repayments during interviews with The News Journal to discuss Benner’s use of her state credit card in August.
On June 28, at the request of Flowers, Benner repaid an additional $3,412.86 to the state for improper charges made over a two-year period dating back to May 2011. Flowers now says many of those charges were appropriate business expenses, and Benner may be due money back from the state.
Kristopher Knight, the director of accounting, sent Flowers the Aug. 30 memo, saying he is concerned that Flowers has offered conflicting statements about charges made by Benner on her state card. Knight is questioning why the state would return money that Flowers’ office determined earlier was an improper state expense.
Got that? There were more reimbursements by Ms. Benner to the state — asked for by Chip Flowers — but now he thinks that some of these reimbursements were appropriate expenditures for State business.
This is alot less likely to happen in an organization where line supervisors have to approve the spending of their subordinates. You expect oranizational accountability to increase the further up the management chain you get. In the People’s Treasury, organizational accountability doesn’t even seem to exist.