Following the indictment of former Pittsburgh Police Chief Nate Harper on theft of public funds, a public accounting firm will examine the city’s internal control structure when it comes to cash.
The Intergovernmental Cooperation Authority (ICA), a financial oversight board, approved $90,000 for an analysis by Gleason and Associates.
“In the corporate world you have Sarbanes-Oxley processes," said ICA Chair Dana Yealy. "Unfortunately you don’t have that type of discipline in local government. That’s really what we want for the City of Pittsburgh: much deeper discipline in the approach to internal controls.”
According to federal investigators, while Harper was chief he instructed finance staff to deposit some checks for the use of officers at special events into two unauthorized accounts at the Greater Pittsburgh Police Federal Credit Union, rather than into the city’s general fund at PNC Bank. Authorities say $70,000 was diverted, and $31,000 of that was used for by Harper for meals, alcohol and household items.
Harper has also been indicted on charges of willful failure to file income tax returns from 2008 through 2011. Attorneys for Harper have said he plans to plead guilty to the tax and conspiracy crimes he's been charged with.
ICA’s Yealy said the Gleason analysis will look at processes in place for the handling of payments.
“For example, you’ve got people going to the zoo and paying a fee,” he said, “how does that cash payment get recorded and how do we make sure that the cash from the pool makes it into the appropriate bank account for the city?”
The analysis will look at segregation of duties and what automation captures the information and tracks it through the bank accounts.
“Gleason’s work is supposed to help identify a road map, and then there will be another phase of helping the city implement that road map and tighten up those controls," Yealy said. "Automation will be part of it; it won’t be the sole answer.”
Several years ago, the ICA dedicated $7.5 million from the gaming commission to the city for the implementation of a financial management system that would tighten controls.
“Obviously it hasn’t been completely implemented,” Yealy said. “It needs to be expanded, and that’s part of what this process is — is to find out what other processes within the city cash management system needs to looked at and controls enhanced.”
Gleason and Associates will work with the city controller’s office, finance departments and the city’s outside auditor on the analysis.
The analysis is expected to start immediately, and the timeline depends on the scope of what they find.