---

 [ ARCHIVE ](https://mail.citywatchla.com/index.php?option=com_content&view=category&id=16)

#  Audit Breakdown Predictable. Will the City Now Stand Up to D’Arcy?

![](https://mail.citywatchla.com/images/stories/Feb-2015/014g.png)PERSPECTIVE-When the City Council [announced a “compromise” with Brian D’Arcy](http://www.latimes.com/local/lanow/la-me-ln-deal-dwp-union-nonprofit-records-20141112-story.html#page=1), boss of DWP’s labor union, over the scope and conduct of an audit covering two non profit trusts, my eyes rolled.

An audit with restrictions is not a legitimate audit.

[I suggested a number of audit steps](https://phinvv.wordpress.com/2014/11/29/audit-checklist-for-controller-galperin/) that City Controller Galperin could apply to make the best of a bad hand. Unfortunately, he was never given a chance. No surprise when you are dealing with people who do not believe in transparency.

An [editorial in the Daily News provides an excellent summary](http://www.dailynews.com/opinion/20150213/la-paying-price-for-compromising-on-dwp-trusts-editorial) of what Galperin was up against, so I won’t go into the details here except to say the objection D’Arcy’s people raised about the auditors’ extensive note-taking is enough to prove the union was never serious in its negotiations with the City Council. Kind of like Vladimir Putin’s strategy in dealing with the west over Russia’s interference in Ukraine.

Where does this impasse leave us?

The court has to rule on the union’s appeal of the decision that supported the city’s right to audit the trusts without restriction.

If the appeal fails – and it should – then the city will have leverage to conduct a real audit, including the power to subpoena anyone or anything.

But will the City Council go the whole nine yards if given the opportunity?

My guess would be no. After all, there was no sound logic in compromising to begin with. Why would the Council care now? It was obvious that politics trumped the public’s interests – D’Arcy’s history of directing millions of dollars to candidates for city offices saw to that.

{module \[1177\]}

Controller Ron Galperin and City Attorney Mike Feuer appear to be the only ones willing to push back. The Mayor,for whatever reason, seems to prefer standing on the sidelines despite being [denied the right to appoint management representatives to the boards of the non profits ](http://www.citywatchla.com/4box-right/7376-ceding-independence-to-ibew-s-d-arcy).

It may take a while before the court rules on the appeal. Ron Galperin steadfastly wants to withhold the next $4 million installment. But there’s still $12 million in cash sitting in the trusts’ accounts we may be able to recover. The city should ask the judge to order the trusts’ assets frozen until the case is decided. It would be a shame if the funds were transferred beyond the reach of the city.

It is time for the Mayor and City Council to get on board with Feuer and Galperin to protect the interests of the residents and ratepayers. If they cannot do it on this issue, then what good are they?

 ***(Paul Hatfield is a CPA*** ***and former NC Valley Village board member and treasurer******. He blogs at Village to Village and contributes to CityWatch. He can be reached at: <phinnoho@aol.com>This email address is being protected from spambots. You need JavaScript enabled to view it. )***

**–cw**

**CityWatch**

**Vol 13 Issue 14**

**Pub: Feb 17, 2015**

Written by Paul Hatfield.

February 16 2015

<a class="a2a_button_facebook"></a><a class="a2a_button_twitter"></a><a class="a2a_button_email"></a><a class="a2a_button_print"></a>[](https://www.addtoany.com/share)

![](https://mail.citywatchla.com/images/stories/Feb-2015/014g.png)PERSPECTIVE-When the City Council [announced a “compromise” with Brian D’Arcy](http://www.latimes.com/local/lanow/la-me-ln-deal-dwp-union-nonprofit-records-20141112-story.html#page=1), boss of DWP’s labor union, over the scope and conduct of an audit covering two non profit trusts, my eyes rolled.

An audit with restrictions is not a legitimate audit.

[I suggested a number of audit steps](https://phinvv.wordpress.com/2014/11/29/audit-checklist-for-controller-galperin/) that City Controller Galperin could apply to make the best of a bad hand. Unfortunately, he was never given a chance. No surprise when you are dealing with people who do not believe in transparency.

An [editorial in the Daily News provides an excellent summary](http://www.dailynews.com/opinion/20150213/la-paying-price-for-compromising-on-dwp-trusts-editorial) of what Galperin was up against, so I won’t go into the details here except to say the objection D’Arcy’s people raised about the auditors’ extensive note-taking is enough to prove the union was never serious in its negotiations with the City Council. Kind of like Vladimir Putin’s strategy in dealing with the west over Russia’s interference in Ukraine.

Where does this impasse leave us?

The court has to rule on the union’s appeal of the decision that supported the city’s right to audit the trusts without restriction.

If the appeal fails – and it should – then the city will have leverage to conduct a real audit, including the power to subpoena anyone or anything.

But will the City Council go the whole nine yards if given the opportunity?

My guess would be no. After all, there was no sound logic in compromising to begin with. Why would the Council care now? It was obvious that politics trumped the public’s interests – D’Arcy’s history of directing millions of dollars to candidates for city offices saw to that.

{module \[1177\]}

Controller Ron Galperin and City Attorney Mike Feuer appear to be the only ones willing to push back. The Mayor,for whatever reason, seems to prefer standing on the sidelines despite being [denied the right to appoint management representatives to the boards of the non profits ](http://www.citywatchla.com/4box-right/7376-ceding-independence-to-ibew-s-d-arcy).

It may take a while before the court rules on the appeal. Ron Galperin steadfastly wants to withhold the next $4 million installment. But there’s still $12 million in cash sitting in the trusts’ accounts we may be able to recover. The city should ask the judge to order the trusts’ assets frozen until the case is decided. It would be a shame if the funds were transferred beyond the reach of the city.

It is time for the Mayor and City Council to get on board with Feuer and Galperin to protect the interests of the residents and ratepayers. If they cannot do it on this issue, then what good are they?

 ***(Paul Hatfield is a CPA*** ***and former NC Valley Village board member and treasurer******. He blogs at Village to Village and contributes to CityWatch. He can be reached at: <phinnoho@aol.com>This email address is being protected from spambots. You need JavaScript enabled to view it. )***

**–cw**

**CityWatch**

**Vol 13 Issue 14**

**Pub: Feb 17, 2015**

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