I wrote recently how a recent audit of Benton Harbor’s finances revealed that they not only are not out of debt, they still have a sizable deficit. Michigan Citizen has more on this with interesting commentary from Detroit accountant Greg Frazier. What Frazier says suggests that Joe Harris, so-called savior of Benton Harbor, is actually a crappy accountant.
“The issue here is that you have an emergency manager zealously pursuing his mission of cost-cutting to impress his employers and the media, and willfully ignoring critical accounting controls that are in place to protect the resources and property of the city of Benton Harbor,” said Detroit CPA Greg Frazier.
“One of the material weaknesses identified in the audit report is the absence of proper Segregation of Incompatible Duties: Under this EM, the same person that handles the cash also prepares the bank reconciliations. This is a license to steal money,” said Frazier. Such controls have been required by the accounting profession since its beginning.
All Public Act 4 says is that the Emergency Manager “shall have a minimum of 5 years’ experience and demonstrable expertise in business, financial, or local or state budgetary matters”. It doesn’t actually say they have to be a good accountant.
It’s a great article. Highly recommended.