Los Angeles gets black eye and bloody nose, still no clue about ethics

Warning: Internal Control Breach

Once, Oops. Twice, Maybe. Three times! GIVE ME A BREAK!!!

Internal controls are essential to managing any reputable organizational entity. Everyone from the Mayor, the Board of Water and Power Commissioners, the auditors, to the citizens of Los Angeles (Alias DWP shareholders) should be concerned with internal controls. If they aren’t, they had better get concerned quick. There is no question DWP rates are going up – way Up! And, Airports and Harbor fees are not far behind.

According to the Committee of Sponsoring Organizations (http://www.coso.org/index.htm), an authority on such matters, internal control is a process conducted by directors and managers to provide reasonable assurance that an operation is performing effectively, efficiently, reliably, in compliance with laws and regulations, and is safeguarding assets against unauthorized acquisition, use or disposition. Internal control must be inherent in the way management runs the business and permeate the entire organization and all of its actions.

Thanks to California State University Professor Rick Hayes, here is a short list of features that usually contribute to a successful control environment:

• Commitment to integrity and ethical values
• Commitment to competence and quality
• Independence, integrity, and openness at the Board level
• Leadership in control by example (management philosophy and operating style)
• An appropriate organizational structure
• Appropriate delegation of authority with accountability
• Appropriate human resource policies and practices

Any of them sound even vaguely familiar? If not, count on rates going UP.

During the next couple of posts, plan on discussing City management. You are invited to share your views.