Audit finds Los Angeles' Neighborhood Councils need stricter fiscal oversight

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The city of Los Angeles administers 89 Neighborhood Councils. Each receives about 45-thousand dollars a year for outreach, local projects, and operating expenses. But the city has never formally assessed the way the neighborhood councils spend that money. A new audit from the city controller's office recommends closer monitoring.

The audit found that many neighborhood councils frequently violate rules that govern the ways they spend and account for money. Over 3-and-a-half years, the councils made 880-thousand dollars in purchases without submitting the proper paperwork on time.

City Controller Wendy Greuel praised the councils for encouraging a lot of important volunteerism, but said they should do better at keeping their books.

"The Neighborhood Council system is one that is worth a lot here," said Greuel, "but we also want to make sure that the dollars are spent wisely."

Greuel’s audit examined 14 councils and found five that couldn’t locate some of the equipment they’d bought – computers, cameras, and wireless microphones.

The Los Angeles Department of Neighborhood Empowerment oversees the 89 neighborhood councils and requested the city controller’s audit. The department’s general manager Bong Hwan Kim said the department’s fallen behind on its financial oversight because of a shrinking staff. He announced new restrictions coming in the next month, including eliminating petty cash:

"We simply don’t have the staff resources to support that," Kim insisted. "The fiscal liability of having cash in the system is too great."

The potential for fraud in an environment of lax oversight has also attracted law enforcement scrutiny. The city controller’s audit says police are investigating or have investigated six neighborhood councils for more than a quarter- of a million dollars in questionable credit card purchases.