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Sunday, April 10, 2011

AUDIT


April 7, 2011

To the Mayor, Members of the City Council, the City Clerk, the City Treasurer, and the residents
of the City of Chicago:
The Inspector General's Office ("I GO") performed an audit of payments disbursed by the Office
of Emergency Management and Communications ("OEMC") from January 1, 2008 to September
30, 2009. The purpose of the audit was to review, test, and evaluate procedures related to
payment disbursements and contract management to determine whether OEMC had effective and
efficient operations and internal controls, as well as adequate policies and procedures in place.
Based upon the results of our audit, we determined that internal controls were not adequate to
prevent waste and misconduct and, therefore, resulted in substandard disbursement and contract
management processes.
More specifically, the audit found deficiencies in internal controls resulting in the following
negative consequences:
• Voucher Manipulation: OEMC's non-payroll disbursements between January 1,2008 and
September 30, 2009 totaled $72,880,188. The sample reviewed during the audit included
$38,633,405, or 53% of the total amount disbursed. We found that at least $13,678,786,
which equates to an extraordinarily high 35% of the commodities purchased in the
sample, did not match the goods and services of the original invoices and/or that the
actual commodities purchased were not related to the contracts from which they were
paid.
• Missing Inventory: During the review of vouchers, we identified a sample of goods
received totaling $134,583. We met with OEMC representatives to validate the existence
of these goods. Of the sample, 38 laserjet printers, 10 computer carrying cases, seven
notebook computers and a digital camera could not be located. These missing goods
were valued at $19,001, or 15% of the sample.
• Common Law Employees: During the audit period, the auditors identified 50 individuals
contracted through seven different vendors who were identified as
contractors/consultants. Based upon initial discussions with OEMC personnel, the
auditors suspected some of these contractors/consultants to be common law employees in
violation of the Shakman Accord. A parallel IGO disciplinary investigation focused on
one of the seven vendors and subsequently determined that eleven of the
contractors/consultants associated with that one vendor alone were, in fact, common law
employees. The investigative findings essentially substantiated the existence of the
preliminarily identified by the Ioo auditors.
During performance of Ioo audit fieldwork, OEMC began formulating and implementing policy
and procedural changes responsive to the broad scale, systemic deficiencies revealed by the
audit. Accordingly, the !GO credits OEMC officials with acknowledging the audit findings and
promptly moving to address them through remedial measures, the nature and effectiveness of
which we will evaluate in a future public follow-up report.


Respectfully,
Joseph M. Ferguson
Inspector General
City of Chicago
 
Read the report here

2 comments:

  1. This is my favorite part:

    o “The Office of Emergency Management and Communications currently has seven
    consultants performing technology services at a total cost of approximately $1.1
    Million in 2009. If these duties were performed by City employees, it would cost
    the City approximately $630,000; a savings of $505,000. Including a 30%
    benefits cost to these employees’ salary would increase the salaries to $850,000
    and the City would still realize a savings of $260,000, still a 23% savings.”
    o “Besides the cost savings, the OEMC would realize greater control of these
    employees. Currently, the majority of OEMC’s technology group is consultants
    and this limits our employee flexibility. For example, when the Director of
    Information Systems is off a consultant must replace him. In addition, if they
    were city employees, they would live, pay taxes and spend money in the city.”

    I hope Rahm reads that.
    Make sure to click the link to the report. It is fascinating reading. The scams these guys come up with are unbelievable. Here's another good one:

    $22,598 for the redesign of consoles which was listed as 736.12 machine screws, 38.17
    halogen light fixtures, 116.98 power supplies, 26.82 brackets, and 5.29 connectors. The
    section head who approved the invoice to be paid could not explain why the parts listed
    on the voucher did not match the invoice. Additionally, it appears that no one at OEMC
    questioned how there could be .12 machine screws, .17 light fixtures, .82 brackets, etc.

    What a joke. These people made a mockery of every procedure in the book.
    It all goes back to JA. This is why AR left without saying goodbye. He was the Director of Information Services the report keeps talking about. And all those under qualified contractors who have been walking around for ten years wondering whose ass to kiss next are on their way out. They could take 90 percent of the other people in those offices on the tech floor with them. The OEMC would run just as well without them. Only our budget would be about a million dollars less a year. I expect some indictments out of this too. Couldn't happen to better people.

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  2. Contractor/contract kick-backs are right from the corruption playbook. Follow the money is what they taught me in fraud investigation. Who's following the money is the real question. I hope the IG's office follows through and brings some federal charges.

    If 42 short was still in office I would be worried that instead of cutting contractors and consultants, they would cut city personnel from the ops floor so the cash flow to the pockets of the Daley crime family didn't stop.

    I don't know what Rahm is planning, but for good or bad some drastic changes need to happen to bring us from the brink of Detroit.

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