As requests for an audit of the Del Rey Neighborhood Council’s finances continue from a former council president, a current president of a neighboring board has offered to perform an independent financial probe.
Neighborhood Council of Westchester-Playa President Cyndi Hench, a certified public accountant, told The Argonaut that she would be willing — if she is asked — to help with a review of the Del Rey council’s financial practices if it would help dissipate a controversy that has made local headlines since it was discovered that the council had its financial assets frozen last month.
“I would be happy to help them out,” Hench, who previously worked as an accountant at the Nestle Co., said.
Hench has recently been assisting the Los Angeles Department of Neighborhood Empowerment (DONE) with some audit work due to the city’s budget crisis. The agency has had its personnel levels slashed almost in half, going from 33 to 17 employees this year, according to BongHwan Kim, DONE general manager.
The Del Rey board’s funding was suspended by DONE after it failed to submit petty cash transactions and other financial information. The municipal department, which manages all of the city’s neighborhood councils, received the necessary documentation in mid-July and has now restored the council’s funding.
Mark Redick, past president of the Del Rey council, and the board’s treasurer, Brett Flater, have engaged in a series of accusations regarding who had ultimate responsibility over the council’s finances. Flater claims that as president, Redick had “considerable authority to address any issues of transparency while he was president.”
Redick has countered that as the treasurer, Flater was the responsible party for submitting and maintaining financial data, including the aforementioned petty cash statements. Redick also revealed that the council had its funding frozen once before in May, when the required financial data was not turned in to DONE on time.
“As past president for almost two terms, I would welcome (an audit,)” Redick said. “I would like to see our current treasurer held accountable.”
Hench believes both a neighborhood council president and its treasurer should hold some responsibility if a local council’s funding is frozen.
“If I’m the president of a neighborhood council and the treasurer is not doing his or her job, I would bring it up to the board and have them removed,” Hench, who said she has audited some of Del Rey’s past fiscal records, said.
Jay Handal, a former chair of the West Los Angeles Neighborhood Council, says his council would never have had its funding suspended.
“As (the president) I would ensure that my paperwork was in order, because I believe in playing by the rules,” Handal asserted.
In the event that a treasurer on a council where he was president did not disclose that the board’s funding was frozen and did not submit petty cash statements, Handal said he would have disclosed to the board what had transpired.
“I might not have pointed my finger at anyone, but I would let the board know that I, as chair or president, would be taking charge and rectifying it as soon as I could,” he said.
“In all honesty, I would also have to point the finger at myself as chair for not following up and making sure this was done in a proper action,” Handal added.
At the Del Rey board’s May meeting, according to the council minutes, Redick requested that Flater produce the current financial statements. After the treasurer did not offer them, a heated discussion ensued about the meaning of an April memo by Kim’s office regarding when financial data should be submitted to the council.
DONE’S directive states: “Because the entire board shares the fiduciary responsibility for the expenditure of their public funds, all U.S. Bank purchasing card transactions and monthly bank statements must be approved by every (neighborhood council) board in a public meeting.”
Hench, who served as her council’s treasurer prior to becoming its president, agrees with Redick that maintaining financial records is ultimately the responsibility of the treasurer. But she also believes that many of the fiscal custodians of neighborhood councils are not always properly equipped to manage $45,000 in financial assets, the annual budget of each local council.
“DONE has a lot of good, hard-working people, but they’re not accountants,” she said. “And the city doesn’t have a very good training program.”
Hench said she would like to see a form of peer review instituted among the 91 local advisory boards, where treasurers from other councils would review the books of a nearby council or a board from another part of the city.
“That’s where you’d find out who the good treasurers were and who wasn’t very good,” she predicted.
The Westchester-Playa president, who has followed the stories in The Argonaut, said the controversy regarding the funding freeze does not bode well for the reputations of the local advisory boards.
“It can give neighborhood councils a bad name,” she said. “After I read the stories I thought, ‘I wouldn’t want to be a part of something like this.’
“I want our neighborhood council to be impeccable,” Hench continued. “I’m really sad to see this.”
Ivan Spiegel, the parliamentarian of the Venice Neighborhood Council, agrees. Last month, he attended Del Rey’s board meeting to remind them that members of five neighborhood councils were under investigation or had been indicted for allegedly misappropriating funds. While he did not accuse anyone on Del Rey’s council of financial corruption, Spiegel said it could set an unwanted precedent.
“Those indictments put a black eye on every neighborhood council in the city, even though people might think, ‘it’s not on the Westside, so it’s okay,’” he stated.
Hench said it was difficult to judge if there is a need for an audit, but said an independent probe might help quell any questions that the public might have regarding taxpayers’ funds managed by their neighborhood councils.
“Because there’s so much mudslinging going on now, it might be a good idea,” she said. “On the surface, it looks like someone needs to do their work and comply (with DONE edicts).
“I think this makes Del Rey look bad,” Hench added. “It’s the dirty laundry getting out of the house. If an audit is going to resolve things, that would be super.”
Hench said that she has been asked by Kim to create a financial model that the department could use as a fiscal blueprint for auditing purposes in the future.
When asked if he thought an audit would allow his council to move forward without any lingering doubts about its handing of fiscal matters, Del Rey Neighborhood Council president Eric DeSobe responded, “I like the process that DONE has in place, and I would like to continue to follow that process.”
Regarding statements by Flater and DeSobe that the reason the funding was suspended was due to an election challenge that have since been debunked by DONE, Hench demurred on passing judgement.
“I don’t know if I would want to remove someone from the board for that, but I will say that I think that a treasurer really needs to be a person with a lot of integrity,” she said. “It really comes down to how the board wants to proceed.”
Hench also confirmed that Del Rey turned its petty cash statements in on July 9. At the July 8 board meeting, Flater told his council that the matter had settled.
“As of today, that’s been corrected,” Flater had told his colleagues. “All of the documents have been completed and I’m verifying that with the city.”
Redick, who still believes that an audit should be conducted, said the longer there is doubt, Del Rey residents could lose faith in the decisions made by their local advisory council and how taxpayer funds are being handled.
“This could begin to tear at the fabric of what grassroots local governance is all about,” he said. “The people of Del Rey deserve better; the people of Del Rey deserve the truth.”
While she finds it disappointing to hear the rancor between past and current board members and demands for an independent audit of the Del Rey council’s finances, Hench said she understands why the matter has generated interest.
“It’s like driving by a car accident,” the neighborhood council president concluded. “You’ve got to look, even if you don’t want to.”