Financial Controls and Other Tightrope Acts

I’ve been spending a little time with my family, catching up on my parents, siblings, cousins, nieces, and nephews.  We were generally just having a good time, but also talking through the events of the days, careers, and on things going on in our communities in Massachusetts, New Jersey, New York, and North Carolina.  Interestingly, each of us has had a tale to tell on property taxes and how they have risen.  Few were able to explain why their taxes had gone up.  I was able to explain in – I’m afraid – painstaking detail what had happened to ours.

In Newton, we have just come through a fairly intense period where the Executive office has readjusted budgets, developed a Capital Improvement Plan, and has passed three Prop 2½ override votes.  As such, we’ve had some fairly frank conversations on how we spend our money as a community and how this matches our values.  However, it’s important to remember that these large investment and finance issues find expression in day to day transactions and decisions.

As a medium-sized City, the City of Newton is a fairly complex entity with a myriad of departments, two elected bodies, hundreds of employees, a school budget, a city budget, and host of other moving parts.  The City has been working to fix its financial and budgeting processes.  By reviewing current budgets and process, the administration has already been able to make changes such as implementing zero-based budgeting, establishing an audit advisory committee. 

Even so, we might do well to consider some additional, reasonable risk controls. While I am not an accountant, I did spend over 11 years at Ernst & Young and understand the value of examining finances over time.  I know what it means to look at a cost model for a project and try to break it to find out where the weaknesses are.  This tells you where you need to put controls and monitors to make sure that you can identify the problem when and if it happens. 

Internal and risk controls fulfill that need.  They ensure that financial statements accurately present the operating results of the organization; that public funds are administered and expended in compliance with applicable statutes and regulations; and that funds are used for the purposes for which they were authorized and intended.

Moreover, enhanced internal controls ensure that the organization has adopted risk management procedures to evaluate whether strategies effectively address the organization’s stated goals, have identified potential risks and opportunities to meeting those goals, and have established mechanisms and a culture that will help uncover and address these risks and opportunities as they occur.

This is intended to be a short blog so I will not go into details of controls, other than to say the League of Women Voters is working on an appropriate framework.  I can also suggest further sources for anyone interested.

However, for now I’d like to leave you with this:  We put tremendous effort and debate into our current financial plans for the City.  We owe it to ourselves to make sure that we collect and spend our funds wisely, and that we maintain the ability to adjust nimbly as we go along.

Chris Steele is running for the city-wide office of Alderman at Large, Ward 5.  You can learn more at www.steele4newton.org or by contacting him at steelch@yahoo.com