Tuesday, September 30, 2014

Why the Weld County Council Should be More Proactive

In my first article titled “The Time Has Come for Weld County Council to Be More Proactive” I presented the mandate that the Weld County Council review “all aspects of County government.”

The Weld County Charter states in Section 13-8(6):
“Council shall review all aspects of county government and shall make such periodic reports to the people relating to expenditures, efficiency, responsiveness, adherence to statutes, laws and regulations, and other matters as the Council deems advisable.”

In that article I proposed the idea of hiring a full-time internal auditor.  In this article I’d like to expand on this idea by addressing three topics – 1) the types of audits that could be performed by this internal audit staff; 2) the use of external experts to perform certain audits; and 3) the structure of other county audit organizations in Colorado and throughout the nation.

Audits would be performed with the goal of increasing the effectiveness and improving the performance of county procedures.  The financial audit currently being performed focuses primarily on large expenditures and does not address data security.  Data security is an important topic given the data breach that occurred previously when a jail inmate was able to access employee data, including social security numbers.  The County processes three types of critical data - health information (HIPAA data), credit card information (PCI data), and personal information for employees and some County residents (Personally Identifiable Information / PII data).  We need to make absolutely certain our systems are secure.

An audit of data security related to the above topics is a good example where the Council would require outside expertise from a firm that specializes in information technology security.  Experts could also be sought to review certain state or federal programs administered by the County, to the extent that these programs aren't already being reviewed. 

I have researched various audit departments throughout the state and the structures vary significantly.  Some are outsourced totally (i.e. Adams County), and some have a sizable internal staff (i.e. Denver County).  There is no right or wrong answer as to size and structure.  I have proposed what I believe is the best of both worlds with a full-time internal resource along with a small budget for two additional audits by external experts. 

I have run a small business for the past 16 years and part of my consulting practice is to help large organizations design internal controls and security.  In my experience, every organization has vulnerabilities and opportunities to improve processes.

One thread was consistent in my research – audits can be highly political in nature.  We are fortunate to have the Weld County Council who acts as an independent non-partisan voice for the citizens of Weld County. 

Please let me know your thoughts about this proposal by emailing me at jeffreythare@gmail or calling me at 970-324-1450.  You could also contact the entire Council at countycouncil@co.weld.co.us.

This article reflects my opinion and not necessarily the views of the rest of the Weld County Council members.

About Jeffrey Hare

Jeffrey Hare is a Certified Public Accountant (CPA), Certified Internal Auditor (CIA), and Certified Information System Auditor (CISA).  He serves as an At-Large member on the County Council.  He lives in Greeley with his wife Julie to whom he has been married for 21 years.  He and Julie have three daughters who all attend Frontier Academy where Jeffrey also serves on the governing board.  Jeffrey is also founder and CEO of ERP Risk Advisors, an IT consulting firm.

Note:

This article is the second part in a two-part series.   In the first article I addressed the mandate of the Weld County Charter and made the case for hiring an internal auditor.


Thursday, September 4, 2014

The Time Has Come for Weld County Council to Be More Proactive

Weld County has seen phenomenal growth in the past ten years.  Since 2004, our assessed value has grown from $2.9 billion in to $9 billion in 2014, a 210% increase.  During that time, the population of the County has also grown from 218,000 to 264,000, a 21% increase.  Weld County now ranks as the second largest Colorado County in total Assessed Value – behind only Denver.  We have a larger Assessed Value than Jefferson, Arapahoe, and El Paso counties.

Weld County is blessed with plentiful natural resources and a county government which is very pro-business.  Our Commissioners have done a good job of balancing the impacts of the oil and gas activities on the community and environment.  Weld County is also blessed to have the Weld County Charter which was developed by a group of citizens who understand the benefits of local control and the need for holding our elected officials accountable.  The Charter was ratified by our citizens and went into effect in 1976.

The Preamble to our Weld County Charter states:

“We, the people of Weld County, Colorado, in order to avail ourselves of self-determination in county affairs to the fullest extent permissible under the Constitution and laws of the State of Colorado, and in order to provide uncomplicated, unburdensome government responsive to the people, and in order to provide for the most efficient and effective county government possible, do hereby ordain, establish and adopt this Home Rule Charter for Weld County, Colorado.”

The Weld County Charter allows for more local control on some issues.  One of the controls built into the Charter was the establishment of the Weld County Council.  The County Council sets the salaries of elected officials, appoints any County Commissioner vacancies, and monitors the activities of the County outlined here in Section 13-8(6):

“Council shall review all aspects of county government and shall make such periodic reports to the people relating to expenditures, efficiency, responsiveness, adherence to statutes, laws and regulations, and other matters as the Council deems advisable.”

Traditionally, the County Council has taken a less proactive role in this ‘review of all aspects of county government’ initiating audits of certain issues as needed.  I believe the Council could be much more diligent in its reviews by establishing a schedule to regularly review ‘all aspects of county government’ on a more systematic basis.  Current audits don’t cover ‘all aspects’ as outlined in the Charter.

With the growth of our County and because of the mandate of the Weld County Charter, I believe it is time to hire a full time performance auditor that reports to the Council.  This position is normal for most corporations and larger government entities, in order to reduce both operational and financial risks.  This will ensure that we, as duly elected members of the Council, fulfill the role to which you have elected us and gives us an important resource to fulfill this mission.

Please let me know your thoughts about this proposal by emailing me at jeffreythare@gmail or calling me at 970-324-1450.  This article reflects my opinion and doesn’t necessarily reflect the views of the rest of the Weld County Council members.

About Jeffrey Hare

Jeffrey Hare is a Certified Public Accountant (CPA), Certified Internal Auditor (CIA) and Certified Information System Auditor (CISA) and serves as an At-Large member on the County Council.  He lives in Greeley with his wife Julie to whom he has been married for 21 years.  He and Julie have three daughters who all attend Frontier Academy where Jeffrey also serves on the governing board.  Jeffrey is also founder and CEO of ERP Risk Advisors, an IT consulting firm.


NOTE:

This article is the first part in a two-part series.   In the second article I will be addressing the types of audits that would be performed by this internal audit staff, addressing the use of external experts to perform certain audits, and the structure of other county audit organizations in Colorado and throughout the nation.


Saturday, May 17, 2014

Xcel Energy - What Comes Around Goes Around

Xcel Energy - What Comes Around Goes Around

Xcel Energy has been playing the crony capitalism card for years.  They've played both sides of the aisle like a fiddle.  They've energized the eco-left to believe that government subsidizing (i.e. crony capitalism) of wind and solar is good for the environment in spite of the lack of evidence.  They've also given donations to Republican candidates and were able to 'convince' several Republican legislators to vote to distort the free market (so much for principles...).

Karma - the sum of a person's actions in this and previous states of existence, viewed as deciding their fate in future existences or destiny or fate, following as effect from cause

The City of Boulder is causing some Karma for Xcel Energy.  They are now threatening to use eminent domain to seize the property of Xcel Energy to create their own municipal utility.

http://www.dailycamera.com/news/boulder/ci_25768825/boulder-appeals-puc-ruling-argues-city-doesnt-need

While I don't condone the use of eminent domain to seize the property of another person or entity such as Xcel, I do find it quite ironic that Karma is setting in.  Xcel's agenda for the past 15 years has been to increase their profits in the state of Colorado by increasing the cost of the energy they provide.  They are a 'cost plus' provider.  That is the profits they make increase as the input costs for energy increase.  So, as they have been 'forced' to use higher cost inputs such as wind and solar, they have made more profit.

Xcel's strategy has worked like a charm up until recently.  This is what we have in Colorado - mostly to the efforts of Xcel:
  • 2003 Colorado constitutional amendment - this forced all Investor Owned Utilities to use a minimum of 10% of their inputs from wind and solar
  • 2007 - Legislation to increase the Investor Owned Utilities to 20% and enact a 10% mandate on Rural Electric Associations
  • 2010 - Legislation to increase the Investor Owned Utilities to 30%
  • 2013 - Legislation to increase Rural Electric Associations to 20%
Xcel's 'friends' over the past few years are turning on them and that my friends is Karma.  First, it was Solar City and now it is the eco-left City of Boulder.  Couldn't happen to a better group of Crony Capitalists who've abused the legislative process and stolen hundreds of thousands of dollars from ratepayers in Colorado.

Tuesday, January 7, 2014

Xcel Energy Strikes Again: Now Even Solar Companies are Opposing Xcel’s agenda

Xcel Energy Strikes Again: Now Even Solar Companies are Opposing Xcel’s agenda

One company in Colorado has perfected lobbying and the art of manipulating emotions of both Republicans and Democrats to further their corporate agenda – that being Xcel Energy.  Xcel is an ‘Investor Owned Utility’ and makes a profit on a ‘cost plus’ model.  That is, as their costs rise, their profits rise.  Let’s illustrate this with a simple example and for the sake of illustration let’s assume their profit margin is 6% above their costs.

Monthly bill
12% Profit margin on utility charges
$100
$ 12.00
$120
$ 14.40
$200
$ 24.00
In the table above, we see how an increase in what they bill to us increases their profits.  The more we pay on our utility bills, the more the profits Xcel makes for their investors. 
The way they increase their profit margins is to make politicians in Colorado increase their costs.  If they can also convince voters directly that they should pay higher utility rates, that would also be beneficial.
So… this is exactly what Xcel energy has been doing for the past ten years.  It was a driving force behind the 10% alternative energy mandate passed by voters in 2003 via a state Constitutional amendment.  Xcel was also a driving force behind the increase to 20% in 2007 and increase to 30% in 2010.  Xcel was also a driving force behind the fuel switching bill in 2010 that forced power plants to convert from coal to natural gas.
Producers of alternative energy have also benefited as they have been able to produce and sell alternative energy to Xcel.  One of these producers is Solar City has been a significant beneficiary of the alternative energy mandates, riding the coattails of Xcel.  However, it seems that Xcel has turned on solar providers such as Solar City.  The CEO of Solar City sent out this email in December:

It seems that Xcel energy insatiable appetite to increase its cost base has reached a new level as it has turned on its own.  Solar City’s December rally against Xcel is a sign that Xcel believes there are no barriers too high to climb and no legislator that can’t be bought to further their profit motives.  Grab some popcorn, this battle should be interesting to watch.

Unfortunately, families, ranchers, farmers, and other small businesses are the consumers of electricity in Xcel’s service area that will be biggest losers and Xcel’s shareholders will be the winner.  Xcel has a long history of winning this war in Colorado and wouldn't be turning on its partners like Solar City if they didn’t believe they had the support from the Colorado legislature to protect their profits.

While I expect the Democrats to be in favor of alternative energy policy, it is truly disappointing to see how many Republicans have voted for legislation in favor of Xcel over the past 10 years - there are many familiar names in the list: Greg Brophy, Cory Gardner, Frank McNulty, Jerry Sonnenberg, BJ Nikkel, Kevin Priola, Glenn Vaad, Amy Stephens, Marsha Looper, and the list goes on...  It seems that both the Democrat and Republican parties has, at times, sold its soul to Xcel on the backs of consumers throughout the state.  The question is who is looking out for the little guy???