Since at least February, when FBI agents walked out of the North Side police headquarters with boxes of documents, a wide range of officials have worked to scrutinize and overhaul the bureau's practice of assigning police side jobs and accounting for the millions of dollars they generate every year.
Their efforts accelerated when former police Chief Nate Harper was indicted on federal charges of conspiracy, accused of "causing" employees to misapply checks that had been sent to the bureau by businesses that hired officers for side jobs. Around $70,000 was misappropriated and deposited in an outside account, which he tapped for personal use, according to the indictment. Mr. Harper's attorney has said he plans to plead guilty.
But Tuesday, as city Controller Michael Lamb released an audit started just two days before the former chief was indicted in March, it became evident that the fixes that have been made do little to plug some of the holes in oversight that allowed the money to slip out of the city with little detection.
For example, until this week, no one outside the bureau was comparing invoices -- what the bureau is billing businesses -- to deposit slips. Police officials were unsure if that process occurs within the bureau. This process, called reconciliation, could help the city verify that the money it's owed is actually making it into city coffers.
On Tuesday, Denise Haas, the personnel and finance director for the department of public safety, was assigned to go to the bureau to review records. She said she planned to compare invoices that were issued to the deposits made.
Public safety director Mike Huss said her review was prompted by the audit but said the controller's office should be performing the reconciliation.
"Why doesn't he reconcile it?" he said. "Where's he in all of this?"
Mr. Lamb, for his part, said that while he's responsible for periodic audits, the city treasurer is responsible for regular reconciliation of accounts and for reviewing city revenues.
"It's something that really needs to be done by the treasurer's as part of their basic function of auditing revenue for the city," he said.
At a news conference Tuesday, Mr. Lamb reiterated his belief that the way the funds were accounted for opened the door for fraud to go undetected. But it's not clear that fixes that have been made -- segregating funds, for example -- would make fraud easier to detect.
The process that dictates how the funds move through the city has not changed much, though acting assistant Chief Thomas Stangrecki, who oversees secondary employment, said controls have been tightened within the bureau so that checks are rigorously tracked as they move from office to office. Acting Chief Regina McDonald, who previously oversaw the offices, said the new process involves "more of a paper trail."
As before, the bureau's Office of Special Events bills businesses -- from restaurants to strip clubs to churches -- for hiring officers for side jobs and then collects the checks from them. The checks are then forwarded to the bureau's Office of Personnel and Finance. There, bundles of checks are recorded in spreadsheets and then sent to the city's Finance Department, which deposits them. The Finance Department forwards deposit slips and the spreadsheets to the controller's office.
According to an attorney for Sandra Ganster, the head of the bureau's Office of Personnel and Finance who has been on involuntary leave since early this year, Mr. Harper directed her to open the outside accounts and deposit checks in them. Mr. Harper then accessed the funds for personal use through a debit card to the tune of about $30,000.
While the controller's office did receive copies of the spreadsheets and compare them to deposit slips, Mr. Lamb said previously that the problem was that the document was generated "after the checks were getting misdirected."
That meant if a check ended up in an outside account instead of city coffers, there was no way of knowing since the spreadsheet would have omitted it.
That problem has still not been remedied, according to Mr. Lamb, who reiterated that he believes its the treasurer's job to audit that money.
Chief Stangrecki, however, said the Office of Personnel and Finance does receive copies of deposit slips from the controller's office to verify the money sent to the city ended up in its bank accounts. But neither knew if the Office of Special Events was also checking deposit slips to ensure the checks they received made it to the city's accounts. It's not clear if anyone is performing that crucial start-to-finish review.
Previously, neither the controller nor the Finance Department was accounting for the money that came to the city through the cost recovery fee -- a per officer, per hour surcharge that brought in nearly $800,000 in one year. Mr. Lamb said all of that money was accounted for as premium pay, a line item that included wages for officers who worked side jobs. It had the effect of "padding" that account, making it more difficult to see if money was missing, he said.
Though the city and the controller blame each other for the sloppy accounting of the funds, that's one flaw in the system that has been remedied. In April, city council passed legislation creating a trust fund for all of the funds so the city could get a better handle on how much is collected through side jobs, particularly through the administrative fee.
City council also took the step of actually legislating the fee. Now all secondary employment money is deposited in the trust fund and for accounting purposes, is segregated into three line items: premium pay (officers' wages), cost recovery fee and vehicle/equipment fee. This allows the city to know exactly how much it's collected in each category.
In a trust fund, the funds are subject to greater scrutiny since they have to be audited annually by Mr. Lamb.
Soon, the entire process will be removed from the police bureau and instead handed over to the North Carolina-based Cover Your Assets Inc. The company already furnishes software to the city that helps track and assign side jobs to officers. As soon as a contract with the company is finalized, it will take over many of the functions of the Office of Special Events, which will be moved from the bureau to an office Downtown. The company will issue invoices and the checks will be sent straight to the city treasurer's office, located on the first floor of the City-County Building.
Mr. Huss said the city is also working on a software "patch" that will connect Cover Your Assets with the city's financial management software. That means when Cover Your Assets creates an invoice, a parallel "accounts receivable" line will be created at the city.
The new system will allow the Finance Department and the controller's office to track the funds through a computer system from beginning to end, he said, making it easier to detect if a check has gone undeposited.neigh_city - breaking
Moriah Balingit: firstname.lastname@example.org, 412-263-2533 or on Twitter @MoriahBee. First Published October 14, 2013 8:55 PM