Curiouser and curiouser...(WIB 9)

Naturally, after findings like that Cole and Dunton had a recommendation. And the recommendation was stunning.

According to Commissioner Degner, "As a result, Cole and Dunton recommended that NIWIB reconstruct their financial records so that an audit could be performed."

In other words, they were of the belief that one couldn't even audit "the agency" without serious work beforehand.

Now we get to the first and only article published by the South Bend Tribune on this matter - on June 7, 2002 by Keith Benman. The headline: "Nonprofit Pays Out $228,088 To Correct Faulty Bookkeeping".

You, the eternal optimist, probably think that the amount quoted was what was paid to Cole and Dunton - but no! I haven't discovered the amount paid to them.

The article continues: "The Workforce Investment Board has paid most of that money to accountants from BKD LLP, of Indianapolis, who are reconstructing the agency's books going back to July of 1999." (You'll recall that was the date selected Ms. Beasley as feasible starting point).

The article quotes the ever confident Juan Manigault. "'I think we will be pleasantly surprised when this is all done,' Manigault said. 'And one of the surprises may be that the way we did things was not incorrect.'"

Was that indeed the surprise? Not exactly. Back to Alan Degner's letter.

"But throughout the reconstruction, BKD experienced difficulties, which delayed the total reconstruction. These issues included the following:

- a chart of accounts included 65,000 separate accounts for allocating expenses;
- NIWIB staff changed the agreed upon chart of accounts in the middle of a project;
- continual adjustments throughout the process by the NIWIB to the cost allocation plan; and
- a dispute over the reported participant numbers that NIWIB originally submitted to DWD."

The third item on the list is significant and I believe notes the effect of the drawn-down strategy (for meeting expenses) discussed earlier.

Mr. Degner continues: "Beginning October 2002, Crowe Chizek began the audit process on the reconstructed financial records." Finally there is some belief "the agency " can be audited with some hope of a useful outcome.

Read the next section carefully - I missed the significance of it on my first reading.

"During the auditing process, DWD and NIWIB reached an agreement that would allow the WIB to adjust and make corrections of proposed findings by Crowe Chizek as needed. As a result, any potential findings could be rectified before the audits were closed and many findings were resolved with DVD's assistance and approval."

In other words, many problems never made it into the audit report. But a few did, including:

- In February 1998, three fraudulent checks totaling $60,000 were drawn on NIWIB's bank account.
- Internal control over financial reporting and its operation were considered to be significantly deficient and could adversely affect NIWIB's ability to record, process, summarize and report financial data.
- NIWIB had not established a monitoring plan for verifying the adequacy of their sub-recipients' internal control and financial management structure.
- The auditor's report on compliance for the major federal award program for NIWIB expressed a qualified opinion.
- NIWIB was not determined to be a low risk auditee.
- NIWIB was experiencing difficulties preparing monthly financial statements.
- NIWIB did not adhere to its cost allocation plan.
- Grants were not properly administered.
- Approximately $134,000 of funds disbursed to a sub-recipient was not adequately documented as allowable under the terms of the various source grants.
- Federal awards were disbursed to a sub-recipient in excess of the supportable expenditures of the sub-recipient."

A few notes. When you look at the Crowe Chizek report itself, what is meant by the second item above is that the because the accounting system was so bad, the auditors couldn't be sure that they had found all the actual problems "the agency" had. The third item almost makes me smile. Can you imagine "the agency" monitoring someone elses financial records? We know from Ms. Beasley's observations that item five is a serious understatement. And item six sure looks familiar. Once again, cost allocation plans seemed to be a moving target.

As bad as the Crowe Chizek report looks, let's recap a couple of points. Cole and Dunton had worked on the books, BKD worked on the books and corrections were allowed ahead of this report during this process. Add to that, Crowe Chizek makes no guarantee it found all the problems even this far down the line. Sure doesn't fill a taxpayer with much confidence in the stewardship of the WIB.

And, oh yeah! There was something having to do with a million dollar problem, more or less, wasn't there?

We get to that next time.

Don Wheeler