An article appeared in today’s (January 7, 2012) Courier News regarding my and the State’s questioning of the financial integrity of the Dunellen Parking Authority. Background on the issue is on my blog here.

Condensed version: After reading an August 30, 2010 letter from Andrew G. Hodulik, the Authority’s auditor, I became concerned by his statement that due to the “inadequacy of [the Authority’s] accounting system and records for the year ended December 31, 2008,” he wasn’t able to determine the amounts of the Authority’s “accounts receivable, accounts payable and deferred parking permit revenues [which] are recorded/not recorded on the balance sheet or accompanying financial statements.” That letter is on-line at here.

Mr. Hodulik’s comment caused me to contact the Division of Local Government Services (DLGS) within the Department of Community Affairs. On November 29, 2011, the DLGS, apparently finding merit to my concerns, wrote the Authority a stern letter noting that for several years it had insufficient controls “surrounding the monitoring of parking permit fees and parking meter collections and proof of collections.” The DLGS stated that the Authority’s “ongoing failure to resolve the significant [accounting] deficiency . . . is not acceptable” and demanded that it develop a Corrective Action Plan within 90 days. See the letter here.

I felt that the State’s finding, which in essence said that that Authority didn’t keep records of how much cash it was receiving from meters and permit sales (thus allowing pilfering to occur unchecked), warranted notification of the Borough Council as well as the media. During his research of the matter, Courier News staff writer Sergio Bichao was provided with the Parking Authority’s January 6, 2012 letter to the DLGS. That letter is on-line here. This letter indicates that most of the more critical accountability issues had already been addressed in 2004 and 2008.

Bichao’s article accurately stated that the January 6, 2012 letter “baffled” me. The matters that confuse me are:

a) Why did Hodulik’s August 30, 2010 letter, which was written approximately two years after the Authority had installed the new, improved parking meters in 2008, not indicate that the problem with meter collections had been resolved?

b) Why did the DLGS, after reviewing the matter in late 2011, come to the apparently erroneous conclusion that parking meter collections were not properly accounted for when that problem was allegedly resolved in 2008 when the new, improved meters were purchased.

I’ve always understood that a government audit’s purpose is to professionally evaluate whether public money is being properly safeguarded and accounted for and to clearly report those evaluations to the taxpaying public. In this case, the audit reports apparently did not do their job because the DLGS–the State agency officially tasked with keeping track of local agencies’ fiscal integrity–erroneously concluded that the Authority’s meter collection and permit revenues were not properly accounted for. If the state agency charged with ensuring the financial integrity of public agencies cannot correctly interpret those agencies’ audits, I don’t see how a regular citizen is supposed to do better.

Also, the article reveals that the DLGS “does not normally review audits at this level of detail.” If this is true, and if the audits are not written in a manner allowing them to be interpreted by the general public, I question whether the audits’ value exceeds their expense.

I think that this matter illustrates that some sort of reform is needed on how audits of public funds are conducted and reviewed. Currently, millions of tax dollars are spent by thousands of public agencies across the state for audits that are “not normally reviewed” in detail by the state government and, even when they are so reviewed, are fundamentally misinterpreted.

Chairman of the New Jersey Libertarian Party's Open Government Advocacy Project. Please send all comments to [email protected]