San Diego's Prop C, a way to silence the auditor

John Torell, city auditor from 2005 to 2007, speaks up

‘I characterized that administration as ‘form over substance.’ They were more concerned with how their guy looked than to do the right thing.” That is John Torell, who was San Diego city auditor from 2005 to 2007, speaking in an interview. He tried to teach the administration of Mayor Jerry Sanders (“their guy”) that an auditor should be independent of the entity being audited, a basic accounting concept. “They didn’t quite get the role of an independent auditor in an organization. They did not nurture or foster or encourage contrary opinions. It was an oppressive environment.”

The end came early last year when Torell was preparing a report on internal controls. He prepared a statement showing how the City’s internal controls “ARE MINIMALLY ADEQUATE TO ASSURE” timely and accurate financial statements. That “was not acceptable to the Mayor’s Office,” says Torell. His boss, Jay Goldstone, told him so. The report was changed to read that the controls “HAVE BEEN IMPROVED TO PERMIT” timely and accurate financial statements. Torell was told to state something he knew was not true. “They perceive the auditor’s role as one of a team player. This is how San Diego got in trouble in the first place. People knew the financial statements were not adequate, but they were afraid to say so.”

Nonetheless, the real estate development industry, which has Sanders and his team in its pocket, has maneuvered a noxious antihonesty measure onto the ballot for June 3, Proposition C. Incredibly, it would permit the mayor to play a major role in the selection of the official who audits city departments, which the mayor himself runs.

Torell is now back in Santa Barbara. But he is so disturbed by Proposition C that he has prepared a message for San Diegans. Torell’s statement reads in part: “As the former San Diego city auditor, my statutory responsibilities included rendering an annual opinion on the adequacy of the City controls over financial reporting. My ability to express that opinion was severely curtailed after the ‘strong mayor’ form of government was implemented. As the auditor, I now worked for the mayor and was told I needed to be a ‘team player.’ The conflict between this concept and the auditor’s code of professional ethics was the reason I resigned from City employment. The objectivity, honesty, and the openness that results from the city auditor being free from the fear of retaliation by the mayor’s office serves not only to benefit the City organization, but ultimately serves the best interests of the taxpayers.”

Under Prop. C, the city auditor would report to a new audit committee made up of two councilmembers and three “public members.” A screening committee would recommend candidates for those public-member posts; the Mayor’s Office would play a role in that screening.

Not surprisingly, the downtown business establishment and Union-Tribune favor this rigged system. Councilmember Donna Frye knows what happens in San Diego when so-called outside experts get named to such posts: those experts are usually tied to the establishment.

That’s exactly how San Diego got Prop. C. Sanders named a bunch of real estate lawyers and lobbyists, along with establishment lackeys, to the Charter Review Committee. Hardly surprisingly, it recommended that the mayor get more power, including the ability to play a major role in naming the auditor. Prop. C “allows the mayor to be involved in the selection directly of the auditor,” as well as the firing of that auditor, says Frye. “It would be like Duke Cunningham appointing the person who audits his IRS returns.”

Says Torell, “Don’t be fooled by Proposition C. It is a veiled attempt by the Mayor’s Office to maintain control over the selection and supervision of the city auditor. Only an auditor free from the political pressures of the Mayor’s Office can serve the City and its citizens.”

The auditor should be elected or named by the council. But that would be democratic.

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Response to post #2: I have never read Rose's book. It sounds provocative. Best, Don Bauder

Response to post #3: Linda Evans certainly deserves praise for her courage and intelligence. She beat the system. Best, Don Bauder

Um, Johnny? Francis has said publicly that he's going to give firefighters and cops a raise. So I guess you're voting for Morrow?

Since it seems to be "give Johnny a book suggestion" week here's my next one. Go read Mike Rose's 'The Mind At Work: Valuing the Intelligence of the American Worker'. Maybe it will help you get over your HS diploma issues.

‘I characterized that administration as ‘form over substance.’ They were more concerned with how their guy looked than to do the right thing.”

Shesshhhh...another nail in Sanders re election as Mayor.

I am glad we are getting the scopp from an insider this time.

Sanders goose is cooked, everyone knows he failed to even come close, or even make an effort, at the job he was elected to do.

Pension mess, still here.

Budget chaos, still here.

Broken sewer system, still here.

FF and PD all making 6 figures with just a HS diploma, still here.

And the list goes on......

And since Johnny is so fired up about how lawyers should make more that simple high school educated folks, I offer this article: http://www.signonsandiego.com/news/metro/20080515-9999-1m15appeal.html

Response to post #1: You are so right. Sanders promised to get the house in order and he hasn't even picked up the broom yeet. To get the house in order, he would have to ruffle some feathers -- say, those of labor unions and corporate welfare recipients. He won't do that. Best, Don Bauder

Don, if I'm not mistaken here, the non-public safety unions of SD offered up their own cost saving retirement package. It actually saved even more than the mayor's proposal and made more sense. How much more feather ruffling can they offer?

There are only two kinds of people who support Proposition C.

  1. People who aren't paying attention.

  2. People who like denying, delaying, and deceiving.

Vote No on Proposition C.

SP now rates San Diego's financial situation as an "A" with positive going forward outlook. If I recall correctly, this is the lowest A rating. But in fairness, it's alot better than the last four years of suspension. I'm curious to find out with this new rating if the Mayor and his minons intend to follow through the private bond offering that Mr. Aguirre would not touch with a 10 foot pole.

Response to post #7: If the proposal offered more in cost savings than what the mayor proposed, that may not be very much. Best, Don Bauder

Response to post #8: Well said. I can't imagine how anybody, given what San Diego has been through, could vote for this. Best, Don Bauder

Prop C is DOA-especially after the Reader/Don Bauder weighed in today.

Stick a fork in Col. Sanders, he's done.

Response to post #11: However, the mayor's office is announcing this morning that S&P has restored SD's credit rating, although I don't know to what level, and I am very suspicious of that, given that ratings agencies get paid by those they are rating. Best, Don Bauder

"ratings agencies get paid by those they are rating"? Yeah, but they don't get to dictate what the outcome is. I pay Experian when I get a credit check, does that mean I get an 850? Didn't think so.

For the John Torell's of the world, there are the Arthur Levitt (former SEC Chair) and Lynn Turner's (former SEC Council), you know, the people that wrote the Kroll Report? For those that do not know, they are the ones that wrote the road map for San Diego to get out of the financial trouble and out of the Securities & Exchange Commission's dog-house. Which is basically what the City used to craft Proposition C.

Let's see should I follow what the former SEC big wigs said to do or what appears to be a disgruntled former employee?

Now that Mayor Sanders has brought out of bondage of private bond financing and into the promise land of Public Bond Markets will he been seen as the City's Profit...pardon the pun. If nothing else the media machine will be working overtime over the next couple of weeks.

Meanwhile, I see Steve Francis hanging his head over the porcelain throne watching the millions he’s spent on media dollars circling the drain, on its way to the Pt. Loma treatment plant.

Response to post #13: Go with Torell. He didn't charge San Diego $20 million for a report that was largely lifted from material that the city attorney had already put together. Best, Don Bauder

Response to post #14: I doubt if this will hurt Francis. Intelligent voters will be very suspicious of the timing. I still don't know what rating San Diego is getting. My computer is on the fritz and I had trouble downloading it. Best, Don Bauder

JohnnyVegas - God forbid anybody has a differing opinion than you. I guess it's easy to insult and dismiss a stranger on-line. You must be fun at parties...

:)........Relax SanDiegoBorn...it's only the Internet.

Response to post #25: Isn't that demeaning? ONLY the internet? Best, Don Bauder

Response to post #17: If the city believes it can sell bonds, as the mayor and his minions claim, it would be irresponsible to go ahead with the private offering at a higher interest rate. Put it this way: if Sanders says he will go ahead with the private offering, that suggests he knows investors won't line up for San Diego bonds. The one salient point here, as I posted yesterday on my blog, is that rating agencies are in terrible repute now, justifiably. Investors may not give a hoot whether S&P says San Diego has improved financial reporting. Best, Don Bauder

Go with Torell. He didn't charge San Diego $20 million for a report that was largely lifted from material that the city attorney had already put together.

Damn!...you beat me to it.

Anyone that would pull a scam on the level and to the extreme Kroll did has ZERO credibility with me, and most people with half a brain, which appears to count SanDiegoBorn out.

The damage in Sanders 4 years far outweighs FINALLY getting a rating from a dubious agency.

Response to post #19: Yes, Kroll and its law firm Willkie Farr, pulled a fast one. Best, Don Bauder

Response to post #20: It certainly does. Best, Don Bauder

dbauder - Thanks for your measured response to my thinking out loud. Considering I'm gathering the facts and that the proponderous of information out there cite these former SEC big wigs, what's a guy to think?

JohnnyVegas - God forbid anybody has a differing opinion than you. I guess it's easy to insult and dismiss a stranger on-line. You must be fun at parties...

Response to post #23: These former heads of the SEC make bundles after they leave, doing these kinds of consulting jobs. Levitt, who charged $900 an hour, had others do the work -- what there was of it -- and then he presented the report to the council. It was clear he didn't know much about it. Best, Don Bauder

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