New city policy aims to improve accountability

Mayor Mark Kruzan and Deputy Mayor John Whikehart recently unveiled a broad financial plan that will place greater accountability on government officials in light of an embezzlement scandal.

Justin Wykoff, a former City of Bloomington projects manager, was arrested last month on 24 counts of embezzlement and one count of conspiracy for bilking the city of more than $800,000, according to FBI Indianapolis Division records.

“I certainly regret that these actions are at all necessary, and I’m sorry for the circumstances that have led to the alleged illegalities,” Kruzan said at the city council meeting last Wednesday.

Kruzan said he believes the new policies would have detected, if not prevented the scandal. He touched on the importance of segregating departmental duties so no one has “excessive autonomy,” creating an approved list of vendors through the Office of the Controller and eliminating open-ended appropriations.

“This is about increasing accountability and efficiency,” Kruzan said. “It’s not just about one case.”

Although Wykoff’s actions have made the development of new financial policies more urgent, Whikehart said they were necessary for the city regardless.

“The actions that we’re taking in developing a financial policies manual would be actions that we would’ve taken anyway at this point in time,” Whikehart said.

Whikehart and Controller Sue West have dedicated the past two months to drafting a new financial policies manual, which will serve as a model of internal financial controls for municipal government in Indiana, Kruzan said.

There are a number of new procedures that will be implemented in the future. Several positions with financial responsibilities will shift to the controller’s office, projects will be more strictly reviewed before being approved, an approved vendors list will be
created, credit cards will be eliminated and contracts will be reviewed by more departments.

Projects, contracts and funding requests will be reviewed by the mayor’s office, then the legal and controller’s office, then returned to the mayor’s office before being considered by a board or commission.

Project managers will have to provide quarterly reports of finances and projects will be physically inspected after they are underway.

Whikehart also stressed the importance of “segregation of duties,” which “refers to a fundamental internal control to guard against fraud or error,” according to the manual.

“Segregation of duties is a critical element of an internal control process,” Whikehart said.

The manual is a work in progress and community feedback is welcomed, Whikehart said. Several items in the manual were on the Bloomington City Council agenda last Wednesday for first reading.

One ordinance moves five positions from the Public Works Department and one from the Parks and Recreation Department to the Office of the Controller in an effort to centralize the accounting functions of the city. It will also eliminate the assistant director position in the Office of Public Works and create a purchasing manager position in the controller’s office.

The other ordinance authorizes the controller’s office to approve certain municipal claims in advance of board approval. It will also allow the city to make payments through electronic fund transfers, instead of employees paying vendors with credit cards.

The council will discuss these ordinances Wednesday. Kruzan said these policies will help ensure the embezzlement scandal is an isolated situation and restore trust in city government.

“At the core of our efforts has been our resolve to develop financial controls that will prevent or will detect any future problems whether intentional or accidental in nature,” Kruzan said.