An audit of WEDC's accounting systems shows some of the brutal oversights in the first year of the new organization.
Condition: During the year the Corporation did not maintain a control receivable account on the general ledger to record loan activity. As a result, basic internal accounting controls over loans were not in place during the year. Loan activity was recorded in a separate software system to monitor collections and balances of individual loans. However, this system was not systematically compared to loan disbursements and payments recorded in the general ledger. In addition, loan agreements did not always contain approved staff or performance reviews.And there are a whole lot of deliquent loans, up to $19 million of them that state taxpayers may never get a penny back on. The audit also showed that many accounting entries are not reviewed or approved by another person, because WEDC "did not have adequate policies and procedures in place," which could lead to "intentional improper recording, misstated general ledger balances, and potentially conceal fraud." Oh, and about 1/4 of credit card transactions by WEDC personnel were never approved, because they never had any procedures in place to handle such transactions.
Cause: The necessary control accounts were not established in the Corporation’s general ledger and procedures were not established to provide controls over loan monitoring.
Effect: Loan balances at year end were not fairly stated on the general ledger. Extensive effort was required at year end to establish control accounts, determine balances and compare the balances to the separate software system. Because controls were not in place during the year, adequate follow up on delinquent loans did not always occur.
Why is there such a mess? A report from Schenck SC tells the reason, as mentioned in Monday's Journal-Sentinel article on WEDC.
The Schenck audit found that many of the problems were because the WEDC lost dozens of employees - officials have put the number at roughly half - during the agency's transition from the former state Department of Commerce to the new agency.You mean hastily throwing together this new organization in a matter of months without input from the former Department of Commerce on how their system worked has a lot of kinks to work out? No freaking way.
As a result, the agency had safeguards in place for its payroll and operating expenses but lacked those controls over its other financial dealings.
"Financial transactions were either not recorded or improperly recorded throughout the year and went undetected by personnel of the corporation," the report notes....
WEDC's board will now receive a monthly report including an income statement and balance sheet - items that hadn't been provided until now.
And it's not like this is the first time a Walker policy move has backfired and caused more problems than existed before. As I wrote several months ago "Fire, Ready, Aim" is a common Walker implementation strategy. This includes turning down the Milwaukee-to-Minneapolis train money that has cost state taxpayers millions in additional costs, and partisan attempts to install voter ID and end same-day registration, which could end up costing taxpayers millions more and would lead to numerous lawsuits due to the laws being illegally written.
Oh, and need I also remind you of the constantly-changing and confusing concealed-carry rules, or the Family Care fiasco where the Obama Administration forced Walker's DHS to stop limiting enrollees, (and the Walker folks lied about the reason they had to lift the cap), And of course, the grandaddy of all Walker "act first, think later" moves: the Wacky-hut screw-up in Milwaukee County, when Walker improperly privatized Milwaukee County security to a contributor, and then was forced to give County deputies their jobs back, at a much higher cost to county taxpayers.
You get the idea our governor isn't much of a details or implementation guy? He just whacks at some issue, usually causing more damage in the process, making it harder to fix, perhaps to the point of no return. Which means the services involved have to be cut back and/or sold off, probably to some private industry that stands to make a good profit off the deal.
WAIT A MINUTE- That's exactly the plan, isn't it? FUBAR services and sell them off to campaign contributors, who use some of the profits to fund your election campaigns. Not a bad situation if you're in on the deal, but it sure sucks if you're the other 99% of us.