HomeMy WebLinkAboutres1992-025RWH IT COM COUNTY COUNCT- 'AGENDA BILL NO. 92 -125
CLEARANCES
wti
Date
Date Received in Council Office:
Agenda
Assigned To:
al
Date
Originator - Executive
�(.
3�
o � � nn � �
G3 � � U
MAR 041992
�92
,
cxcaxarxx Finance /Coy
Division Head-
`
3/24/92
Finance Council
Department Head-
Prosecutor Review-
WHATCOM COUNTY
C4UNCiL
Purchasing/Budget Dir:
Executive-
Resolution recommending restructuring the finance activities of Whatcom County government.
ATTACHMENTS.
ncil
Recommendation, of the Financial Management Committee with a draft resolution.
Public Hearing Needed? - Yes /lNo/x
SUMMARY STATEMENT•
Resolution 91 -092 requested the Administration to examine the centralization of County financial and
accounting systems. The Executive directed the Financial Management Committee to meet and formulate
a recommendation. That recommendation is -attached.
ORIGINATOR'S RECOMMENDED ACTION.-
The Financial Management Committee recommends adoption of this resolution.
COMMITTEE ACTION (including dates):
COUNCIL ACTION (including dates):
3/10/92: This item was postponed until a later meeting.
3/24/92: Council approved the resolution. 7-0
Related File Numbers: Ordinance or Resolution Number. R92 -025-
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
fms.res INTRODUCED BY: Executive
PROPOSED BY: Financial Management Committee
DATE: 3/24/92
RESOLUTION NO. 92-'025
ENDORSING THE RECOMMENDATION OF THE
FINANCIAL MANAGEMENT COMMITTEE AS TO THE
REORGANIZATION OF THE COUNTY'S
INTERNAL FINANCIAL STRUCTURE
WHEREAS, in Resolution 91 -092 the Whatcom County Council directed the
administration to review the organization of the County's finance and accounting system;
and
WHEREAS, the Whatcom County Executive requested the Financial
Management Committee to meet and formulate a recommendation regarding the
organization of the finance and accounting system; and
WHEREAS, the committee worked with the Council Budget and Program Analyst
in formulating this recommendation; and
WHEREAS, the Financial Management Committee considered the legal,
organizational, and functional requirements and constraints related to this system and
drafted a recommendation that was deemed acceptable, within the limits of those
requirements and constraints, to the majority of the committee members; and
WI-EREAS, the Committee believes the proposed reorganization will improve
accountability over the financial management of County programs.
NOW, THEREFORE, BE IT RESOLVED by the Whatcom County Council that
the following statements are adopted as the formal requests and policies of the Council:
A. The recommendation of the Financial Management Committee as
presented in Exhibit A as "Proposed Management Structure" is endorsed by the Council.
By this endorsement the Council recognizes the need to centralize responsibility for the
financial information system, and recognizes that the positions of Auditor and Treasurer
serve as a check and balance to each other and to the financial system as a whole.
B. The administration is directed to prepare a transition plan to facilitate the
reorganization of the functions. as presented in the recommendation. Such plan should
be prepared in consultation with the Auditor, Treasurer, Public Works Accounting and
other pertinent staff members.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
?3
24
25
26
C. The administration is also directed to draft the necessary revisions to the
Whatcom County Code to achieve this reorganization and present the reorganization
plan and code revisions to the Council. .
D. Upon acceptance of the reorganization plan and code revisions the
administration shall be responsible for implementation of the plan and periodic reports
to the Financial and Personnel Committee regarding the status of plan implementation
ADOPTED this
ATTEST:
24th day of March , 1992,
Ramona Reeves, Council Clerk
APPROVED AS TO FORM:
Civil Deputy Prosecutor
WHATCOM COUNTY COUNCIL
WHATCOM COUNTY, WASHINGTON
Daniel M Warner, Chairman
/o �(
f
EXHIBIT A
G�X�p�C
February 21, 1992
MEMORANDUM SHIRLEY VAN ZANTCN
t�`�' �XcCllTI�E
TO: Shirley Van Zanten, County Executive C011
FROM: Bob Woods, Temporary Chair - inancial Management Committee
Terry Hinz, Permanent Chair- - G
Barbara Cory, County Treasure
Shirley Forslof, County Auditor J
Brad Bennett, Public Works Fiscal Manage ✓�
Ron Riggs, Auditor's Office Chief Accoun
Colleen Bates - Hansen
SUBJ: Financial Management Consolidation
Per your request and in'conjunction with the request of the County Council, this committee
has met and discussed the recommendations found in the 1988 Matrix study of financial
operations within County operations. While there is agreement within the committee on
many issues, not all issues have resulted in unanimous consent. The findings,
recommendations, and dissenting opinions are presented herein.
Issue 1- Definition of the "Financial System."
The committee is unanimous in agreement that the following processes found in the County
are contained in the overall concept of the "financial system." They are concurrent with the
processes listed in the Matrix study and add some additional items.
From Matrix:
Cash Receiving & Reporting Payroll
Purchase Order Processing & Encumbrance Receiving
Accounts Payable Grant & Contract Accounting
Accounts Receivable Management Reporting
Added by committee:
Budgeting
Inventory Control
Internal Auditing
Tax Reporting
Self Insurance Operations
General Ledger Control
Job /Cost Analysis
General Financial Reporting
Fixed Asset Accounting
Public Debt
IL�J
9
Within the above "operations" are both policy questions and operational issues. Contained
in the Matrix study was a recommendation to decentralize the processing operations of the
financial system while instituting a centralization of accounting functions along with a
Financial Management Director as head of operations. The committee generally concurs
with those recommendations, with specific reservations and dissensions cited later.
Issue 2 - Statutory authorities relating to financial management
Before the issue of organizational options can be addressed, it is necessary to examine the
requirements of the County Charter and state law. In looking at these areas the committee
has noted the following.
The Whatcom County Charter says:
1) The County Council has the authority to: "...establish, abolish, combine, and
divide by ordinance, non - elective administrative offices and executive
departments and to establish their powers and duties." (Section 2.20 (c))
2) The County Executive is recognized as the "Chief Executive Officer" and
has the power and authority to: "Supervise all administrative offices and
executive departments established by this Charter or created by the County
Council." Section 3.22 (a))
3) The Assessor, Treasurer, Auditor, and Sheriff are elected officials whose
departments: "... shall have the powers and duties of their respective offices
as provided by general law: Provided that these offices shall be subject to the
personnel, budgeting and! any other policies set by the County Council."
(Section 3.52) - --
4) The Assessor, Treasurer, Auditor, and Sheriff have the power to: "...hire all
officers and employees of the office or department..." (Section 3.53)
5) The County Council shall enact ordinances to: "..establish procedures for
purchasing supplies, services, mate als and equipment, the awarding of
contracts, rthe processing of claims, land the sale and refunding of bonds."
(Section 9.20)
6) The County Executive is responsible for Information Management,
including establishing %procedures for maintaining a modern, efficient system
for maintaining and disposing of information_ and records, shall maintain a
means to store and maintain, in retrievable manner all county records which
should not be destroyed and which are not necessary for current operation of
county government; and shall provide needed services for all branches of the
2
/06
- Generate "IOU's" when insufficient funds.
- Provide public notice of funds available for redeeming "IOUs."
- Maintains a general and subsidiary accounts on receipts and expenditures.
- Open accounts for public inspection.
- Provide annual and quarterly reports to the County Council.
- Invest funds.
- Pay interest on "IOUs."
- Perform services for other governmental sub- divisions.
- Ex- officio collector of city taxes.
The committee recognizes that within the duties specified in the Charter and in state law
there is room for overlap and interpretation. In assessing those parameters members of the
committee have reached the following positions:
1) Some members believe that the County Charter grants to the County Executive overall
authority and responsibility for all administrative operations. This authority extends to
include those aspects of the financial system where operational responsibilities may be
vested in the Auditor and Treasurer by state law. The interpretation would hold that while
the Executive can implement policies and procedures affecting operations of the Auditor
and Treasurer, the Executive does not have the right to directly supervise and control the
duties of employees of those offices, or hire or fire them.
Another interpretation holds that while the Charter provides administrative authority to the
Executive, the Treasurer and Auditor have full independence of operations, including the
setting of policies and procedures for all functions of their offices.
2) Some members believe that the functions specified to the Auditor and Treasurer as a
result of the Charter and state law, while having a "tradition" of operations over the years,
leave wide latitude for interpretation as to what constitutes an appropriate implementation
of those duties in relation to a modern financial system. In specifics, the duties assigned to
the Auditor do not constitute "control" of an organization wide financial system but, rather,
duties related primarily to auditing some operations contained within a financial system.
Likewise, the duties of the Treasurer relate to "cash control" functions as opposed to overall
financial systems.
Another interpretation holds that the evolution of operations and interpretation of state law
places the control of the majority of the financial system within the Auditor's operation, with
those functions relating to cash, receivables, and assets being part of the Treasurers
operation. Notwithstanding the fact that the language. of state law does not conform to what
might be considered "modern" financial terminology, the intent is that these two elected
offices should have full responsibility for their respective operations.
4
county." (Section 9.60)
"Home Rule" Authority
- Prosecuting Attorney & Judicial Branches are totally independent. State law
is wholly supreme. The county can not impose any changes or requirements
that are not specifically stated or implied in existing law.
- Other elective offices are tied to the County Charter requirements. If not
specified, all powers revert to the legislative authority.
- Even where elected officials in a charter county have been assigned powers
contained in general law, there would still appear to be granted the legislative
authority the right to develop "procedures" and "interpretations" governing
elected officials operations so long as they follow the intent of general law.
RCW Chapter 36 grants the following powers and duties to the County Auditor and County
Treasurer:
Auditor
- Record deeds and instruments required to be filed with the county.
- Examine and settle accounts due to the county.
- Keep an account of cash received & disbursed by the treasurer.
- Record the reports of the Treasurer - Receipts & Disbursements
- Examine books of the Treasurer.
- Audit all claims /demands against the county.
- Send an annual report to the state.
- Make an annual report to the County Council.
- Keep a register of all warrants issued.
- Issue Warrants for claims and cost bills, for the county, agencies, and
political sub - divisions.
- Sign all warrants issued.
- Retain all original bills.
- Cancel unclaimed warrants.
- ex- officio deputy supervisor under the state auditor
Treasurer
- Keep all monies due the county.
- Receive monies due the county
- Issue receipts for money received.
- Account for "paid" warrants.
3
lD 7
3) The committee members unanimously agree that removal of the duties specified for the
Treasurer and Auditor contained in state law would require that the County Charter be
amended. Such an amendment, if pursued, would need to specifically state the duties and
responsibilities of those offices, instead of relying on state law.
Issue 3 - Organizational options.
There are probably an infinite variety of options that can be proposed. Clearly, the
placement of organizational responsibilities for financial management is an issue on which
there is no unanimity. However, a few items of consensus have been reached.
1) There is a significant lack in county operations of an Internal Audit function. The
purpose of such a function generally revolves in the following areas:
A) Performing some of the audit functions associated with the annual state
audit.
B) Auditing financial systems for conformance to generally accepted
accounting principles, and governmental accounting & financial reporting
guidelines.
C) Auditing departmental /divisional operations for adherence to internal
policies and procedures set by the Executive and Council.
The institution of an Internal Audit function must have a high degree of management
independence and should be functionally independent of the overall financial system. It
should be clear to all involved that the institution of a true Internal Audit function will
require the commitment of additional staff resources.
2) In concurrence with the Matrix study, there is a need to centralize responsibility and
control over the financial system along three broad areas: Accounting operations, treasury
operations, and departmental processing.
3) The operations of all aspects of the financial system must be geared towards "service" of
county and district operations as opposed to "control." The institution of the new financial
software will decentralize input and processing operations. As a result, the focus of a
revamped financial operation should be directed towards providing professional support and
training to county and district operations doing the majority of day -to -day processing, while
maintaining an overall control of policies and the most technical procedures, necessary to
maintain coherence in the overall system. -
4) The determination of what level of decision making and data input is appropriate at the
departmental level is not possible at this time. The complexities of implementation of the
5
R) 9
new software will likely have a bearing on what is feasible and what isn't. The overall
director of the financial system will need to make the appropriate delineations as the
capabilities become clearer. However, the overall direction should be a transfer of
"technical" expertise to the financial operations while recognizing that differing levels of
local departmental support and expertise will be required on a case by case basis.
5) Explicit in the design of the financial system is the requirement that the positions of
Auditor and Treasurer serve as a check and balance to each other and to the financial
system as a whole.
Proposed Management Structure
The general consensus of the majority of committee members is that the overall segregation
of authorities should be aligned around the following general plan:
Auditor Responsible for a new Internal Audit function. Recognizing the
requirements of state law, the Auditor will continue with only
those functions required by state law, and only in an "after the
fact" processing and auditing framework. The Auditor will
retain responsibility for preparation of the Annual Financial
Report and other general financial reports (external to the
organization) as a service of the Internal Audit function.
Executive Assumes responsibility for "accounting" functions now
performed in the Auditor's office, along with the current
budgeting, purchasing, and various departmental operations.
This includes all functions of the financial management system
specified in Issue 1, and not assigned to either the Auditor or
Treasurer. Responsible for internal management reporting
systems, control of software, and policies and procedures.
Treasurer Generally maintains existing duties. Responsible for cash
control, investments, banking services, tax billings, and debt
management.
In the above scenario, the Auditor would be essentially independent of the financial system
and controls, functioning as a "watchdog" through the Internal Audit function. The Treasurer
would maintain a fairly high degree of independence through control of cash and
investments, but would be subject to policies and procedures relating to cash management,
debt, and the structures of the financial software.. -
6
PLO
Dissenting opinions:
While generally agreeing with the above structure, committee member Cory believes that
the actual control and operating responsibility of Accounts Receivable and Real Property
y Assets systems should lie within the Treasurer's office, rather than the Treasurer merely
having some "processing" responsibilities that relate to those functions.
Committee member Forslof disagrees from -the proposal and proposes a structure where
operations cited in Issue 1 as the financial system would be consolidated into existing
accounting operations. "Detail" oriented decentralized processing responsibilities would exist
at the departmental level throughout the county. The auditor would have overall control
over financial software and system structures, while the Executive would assume
responsibility for the new Internal Audit function and maintain purchasing, budgeting and
other current operations.
Issue 4 - Implementation steps.
The committee does not propose a specific structure of departments, divisions, and
managers necessary to manage financial system operations, beyond the general areas of
responsibilities cited in the Issue 3 proposals. The reasons are threefold.
On the one hand, the transition and implementation of the new financial software systems
allows a great diversity of options. As such, there is no way at the present time to determine
the staffing needs and lines of authority that might actually be realized. We anticipate that
there is a net reduction in the positions now performing input functions to the current
accounting system, as decentralized input is implemented in the departments. However, not
knowing how complex it will be to manage the software and develop the overall systems and
procedures, it is impossible to accurately forecast in what general areas additional staff
might be needed, and the level of their required expertise. For instance, the creation of a
new Internal Audit function, and its associated staffing needs, will depend greatly on the
scope and levels of services desired.
At the same time, there should be a large degree of input from the Auditor, Treasurer and
Executive in determining how their individual operations are best configured to implement
the responsibilities that are eventually confirmed to them.
Lastly, it must be recognized that existing positions may perform both county wide
"accounting" functions while at the same time perform local "processing" functions that will
remain in a given department. Therefore, it should not be assumed that a wholesale transfer
of positions is necessarily indicated in implementing a transition of operational authority
within the financial system.
At this time the committee recommends that the Executive forward these recommendations
7
to the County Council for prompt review, to establish by resolution policies for the eventual
adoption of ordinances to specify structural responsibilities.
The recommendation of "prompt" action revolves around the fact that implementation of
the financial software is imminent. Questions of responsibilities should be settled as soon
as possible so that the systems can be implemented most efficiently._ -
Once responsibilities have been adopted,- the regular membership of the Financial
Management Committee can tackle the implementation of specific transition steps necessary
to effect any changes.
E:?
//,:7�