The minutes of the September 4, 2012, Coeur d’Alene City Council meeting reflect that Councilman Mike Kennedy excoriated Councilman Dan Gookin for asking how the City’s staff arrived at some information included in the City’s proposed annual appropriation.
The minutes state, “Councilman Kennedy believes it is the role of a Councilmember to act as a board member of a Corporation and trust staff and provide them with the appropriate tools to do their jobs and allow them flexibility to manage their departments.”
Regrettably but unsurprisingly, Kennedy did not say a Councilman’s roles also include properly and diligently ensuring that City’s department heads are doing their jobs and protecting the public treasury.
If the City staff is so trustworthy, then how was former City Finance Department employee Sheryl Carroll allegedly able to carry out a systematic pattern of theft of approximately $365,000 from City funds throughout her decade of her employment?
Wasn’t it the responsibility of City staff (HR Director Pam MacDonald) to first ensure that the City performed due diligence in hiring her?
Wasn’t it the responsibility of City staff (Finance Director Troy Tymesen) to ensure that there were appropriate safeguards in place to prevent and detect outright theft of the public’s money by this trusted employee and others under his supervision?
Wasn’t it the responsibility of City staff (City Administrator Wendy Gabriel) to ensure that department heads (MacDonald and Tymesen) were diligently performing their duties for which they are exceptionally highly paid?
The questions concerning the HR Director and the Finance Director were definitively answered our October 13, 2012, post titled Who Bears Concurrent Responsibility?.
Sheryl Carroll was in a position of trust and responsibility but allegedly able to steal approximately $365,000 in City funds because at least three members of the City staff did not perform their duties acceptably.
City HR Director Pam MacDonald failed to properly and diligently obtain and verify available information that would have revealed Carroll’s conviction for theft committed under a different name prior to her employment with the City. Diligently and thoroughly obtaining and verifying background information on applicants for the Finance Department was MacDonald’s responsibility.
City Finance Director Troy Tymesen failed to properly institute accepted financial procedures to deter and detect fraud and theft. That was his responsibility.
City Administrator Wendy Gabriel failed to properly supervise both MacDonald and Tymesen in a manner that would ensure they were actually performing their duties and responsibilities. Supervising department heads to ensure they were performing their duties was her responsibility. Gabriel didn’t supervise them properly, so MacDonald’s and Tymesen’s failures of duty went undetected.
But what about Magnuson, McHugh & Co. PA? Didn’t the company hired to perform the City’s annual audit have some responsibility for detecting the underlying conditions that enabled Carroll to allegedly steal about $365,000 over ten years? The answer to that question is that Magnuson, McHugh had a responsibility to diligently perform the functions in its written agreement with the City. Here is a link to the FY 2012-2013 Agreement that will be discussed and no doubt approved at the Council meeting on Tuesday, December 18, 2012. It is worded similarly though not identically to the agreements from years past.
Note that the Agreement was presented to the General Services Committee by Finance Director Troy Tymesen. The Agreement clearly defines which party is responsible for performing what duties. Pay particular attention to page 3 of the Agreement and read the last paragraph on that page. It is under the major heading Management’s Responsibilities. “Management” refers explicitly to the City. I’ve added the clarifications in brackets. That paragraph reads:
You [the Mayor and Council] agree that management [the City government] is responsible for: (a) the design and implementation of programs and controls to prevent and detect fraud, (b) informing us [Magnuson, McHugh] about any fraud or suspected fraud affecting the entity involving management, employees who have significant roles in internal control, or others where the fraud could have a material effect on the financial statements or major federal award programs, and (c) informing us [Magnuson, McHugh] about any allegations of fraud or suspected fraud affecting the entity received in communications from employees, former employees, analysts, regulators, short sellers, or others.
So in agreements in years past, the Mayor and Council have agreed that the responsibility for “the design and implementation of programs and controls to prevent and detect fraud” has rested with City “management” and not with Magnuson, McHugh. The City “management” official charged with design and implementation of the fraud prevention and detection programs in the City’s Finance Department was the person who made the presentation to the General Services Committee, Finance Director Troy Tymesen. But it was also City Administrator Wendy Gabriel’s responsibility to ensure that her subordinates, Tymesen and his Finance Department, were complying with the terms of the agreements. That Sheryl Carroll was allegedly able to carry out her scheme of theft of $365,000 for so long is a clear indication that neither Tymesen nor Gabriel were doing their jobs.
Tymesen and Gabriel should be fired. MacDonald should be allowed to retire immediately but without any incentive. But the Mayor and Councilmen going back for years also bear some significant responsibility for their blind, unquestioning trust of these three officials. Did any Mayor or Councilman ever require Gabriel or Tymesen to provide a detailed explanation of the programs and controls in place to prevent and detect fraud and theft in the City’s Finance Department? Apparently not. Should they have? Not according to Kennedy’s bloviation at the September 4 Council meeting. According to Kennedy, the Council’s job is to blindly trust the staff, give them whatever toys they want, and then don’t supervise them. Thus, it comes as no surprise to hear Kennedy, Goodlander, McEvers and Bloem mocking and deriding Councilmen Gookin and Adams for asking questions. McEvers, Goodlander, Bloem, and Kennedy have no concept of duty to supervise.
Unlike their associates on the Council, Councilmen Adams and Gookin clearly recognize their duty and responsibility is to ask appropriate questions about City operations and management. Asking those questions and getting sensible, understandable answers helps the honest and competent staff members perform their duties more diligently and effectively. It helps the honest and competent staff members more wisely and efficiently spend public money to provide the community with the best services possible.
If Mayor Bloem and former and some present Councilmen had properly performed the oversight duties of their offices as mayor and councilmen, then maybe City Administrator Wendy Gabriel, HR Director Pam MacDonald, and Finance Director Troy Tymesen would have diligently performed their duties as department heads. And maybe former Finance Department employee Sheryl Carroll would never have been given a position of trust and responsibility where she could allegedly steal $365,000 from the citizens of Coeur d’Alene.
Next time you hear Bloem, Kennedy, Goodlander, or McEvers berating Councilmen Adams and Gookin for asking questions and for not going along with Bloem’s sequential head-nodding game plan, think about who was not asking questions when they should have been since Sheryl Carroll was hired.