Larry Goshorn, President
I’ve been the technical support consultant for oversight committees on a number of large capital building programs. I’ve been to a lot of oversight committee meetings and seen many a strange or embarrassing presentation. At one meeting for a district that had spent millions of dollars on a project management (PM) system to track costs for hundreds of projects, the cost controls manager arrived visibly shaken. He had good news and bad news.
The prior fiscal year ‘s books had just been audited and the auditor found that $4 million more had been spent the previous year then had been reported. That was the good news — they’d caught a $4 million discrepancy. The bad news was that the problem had happened before. It was systemic and this was the eighth year of the bond program.
It took them three months to sort out the real expenditures. All-in-all, the district had spent $14 million more than they thought they had.
The problem was the inability of the district financial and PM systems to reconcile in real time. Downloads from the financial system were routinely compared to the PM system. Closed contracts always reconciled fine, but individual expenditures could not be reconciled. The cost controls manager always paid close attention to the the year-end close-out reports from the financial system, Every year, he would subtract the year-end expenditures from total funds to determine how much money was left to finish the program — he was unaware of auditor recommended changes and assumed that the year-end close-out expenditures were fixed.
Financial systems handle retentions differently from the PM system. And the PM system didn’t even know what a fiscal year was, or an accrual, or a transfer. Neither system handled payment withholds; they were tracked on spreadsheets. Trying to sort out what has happened after the fact by comparing data downloads and spreadsheets is like driving a car using the rearview mirror.
The problem with driving by rearview mirror is that the first indication of an accident is when the airbag hits you in the face with, “Hey, you just lost $14 million.”
That is why we made Account-Ability. It functions as a front-end to district financial systems. Before a PO is requested, Account-Ability knows if budget and funds are available. When a stop notice is filed, Account-Ability knows when there are sufficient payments due to make a remittance and when there aren’t. It deals with real-time data, and that means project expenditures can be controlled and accidents can be avoided.
