There are two standards in the governance/accounting world today: one for the public sector, one for the private sector. Under the rules of the Sarbanes Oxley Act, chief financial officers of publicly traded companies must certify that the financial results they report are accurate. If mistakes are made and financial statements must be recalculated, the company’s stock price usually takes a beating — and the CFO takes a whipping.
Then you have the public sector.
John Bennett, who functioned as “CFO” for the state of Virginia during the Warner administration, knew of a $137 million miscalculation in the state budget back in December but neglected to tell his boss, Mark Warner, or the incoming governor, Tim Kaine. The reaction? Not surprisingly, Republican legislators issued “howls of outrage” (to use a phrase in the Washington Post). Even Warner-loving editorial pundits conceded that Bennett’s action was a no-no. But now that Kaine has identified the problem and proposed how to fix it, the chattering classes seem quite content to move on. Yeah, yeah, it was a mistake, but there are bigger problems, so let’s get over it.
But Del. Tim Hugo, R-Fairfax, among others, isn’t ready to “get over it.” As he rightly observed: “If you were in the private sector and did this, these people would be facing serious consequences.”
Now, I don’t know whether or not people in the Warner administration intentionally covered up the transgression, as some have suggested. But I share Hugo’s view that the incident needs to be investigated — with the proviso that it not be turned into a partisan excuse to bash Bennett or the Warner administration. The problem, I suspect, transcends partisan affiliations.
Somewhere along the line, Bennett failed to communicate a highly significant piece of information. In my experience in the business world, communications breakdowns are rarely due to deviousness or ill will. In this case, the breakdown appeared to have been connected to the transition from one management team (Warner’s) to another management team (Kaine’s). It’s conceivable that laziness or negligence was a factor — perhaps Bennett was itching to wind up and move to his next job — but the purpose of any hearing should be to correct the structural flaws in the budgetary process. The goal should be ensuring that the error is never repeated, not to hang Bennett.
However, because there seems to be a complacent attitude in the press — $137 million accounting errors in a $60 billion state budget really aren’t that big a deal, unless, of course, it had been committed by the Gilmore administration, in which case the scandal would be flogged for months — the momentum may never build to hold those hearings. We’ll have to wait for a Republican administration to make the same mistake — I’m under no illusions that Republicans are somehow exempt from committing such blunders — for the press to work itself into a lather.
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