David T. DiGiacinto is the Democratic Candidate for Controller in the City of Bethlehem. He is a 1975 graduate of United States Military Academy at West Point.
He spent 6 years as a Captain in the U.S Air Force as a Pilot-In Command, resigning his commission in 1981. After which he spent 18 years with Pfizer in various positions including Sales, Marketing, Business Development and General Management in the Chemical/Food Science and Consumer Health Care Groups.
He joined Spencer Trask Specialty Group LLC, a leading private equity firm which helps start-up companies develop their products, in 2000 and is currently a Senior Managing Director.
He serves on the Board of Directors of several companies, including Minrad International, Inc., a pain management company that focuses on anesthesia and analgesia, where he is an Independent Director, Member of Compensation Committee, Member of Nominating Committee and Director of Minrad Inc; and Vyteris, the maker of a drug delivery patch, where he is Secretary, Director, Chairman of Audit Committee, Member of Compensation Committee and Member of Nominating Committee
He is also the owner of BETHNY Enterprise, Inc., which I have no idea what it does.
He expressed his interest to fill the vacancy on City Council created by John Callahan's election to the office of mayor in 2004. He was nominated to be a finalist by Councilman Schweder. The appointment eventually went to Joseph Leeson.
He was a member of the Bethlehem Authority, at one point he was the vice-chairman of the authority, which is the oversight committee for the City's water department and the watershed. He was not renominated to the board earlier this year by Mayor Callahan.
As you can see, Mr. DiGiacinto has a very impressive business background. His experience at Pfizer and in his current positions with Spencer Trask and serving on the board of directors of publicly traded companies make him qualified to be the City Controller.
The politics behind this election are quite interesting. The following account is mostly hearsay and has not been verified, however from the facts I stated above I believe it is true.
DiGiacinto was supportive of James Delgrosso in the 2003 special election for Mayor. Delgrosso was the candidate backed by Schweder and TJ Rooney. DiGiacinto, as I mentioned above, was nominated by Schweder to fill Callahan's seat on Council. Just connect the dots.
DiGiacinto's political donations also support his allegiances.
( Note: The politics going on in Bethlehem politics at this time were crazy, to say the least. There were secret meetings, back room deals and unreturned phone calls. For those of who do not know the whole story, please read this May 30, 2004 article from the Morning Call, which is reprinted here. It is a great article that explains the different factions in the Democratic party in Bethlehem.)
When DiGiacinto's term on the Authority was up, Callahan did not re-nominate him due to his allegiance to Schweder and Rooney.
Now DiGiacinto is the Democratic nominee for City Controller.
How will Callahan deal with DiGiacinto? Will he support the Republican Candidate Meg Holland? Rumors have it he may already be supporting Holland.
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15 comments:
Business experience is not accouting and auditing experience...
He is the chairman of the audit committee at a publicly traded company. That is experience to be a controller. As a Board of Director, oversight is one of his priorities. If he can make sure a publicly traded company meets the requirements of the Sarbanes Oxley Act, I am sure he can take care of the City's books.
I never said he is more qualifed than Meg Holland. Her qualifications are outstanding. But qualified is qualified. DiGiacinto is qualified to be a City Controller. The job does not require the person to be a CPA.
BethDem, Terrific and well-researched post. I'll note it.
Callahan will surely support Holland. However, it will not be nearly enough..Unless Dige sleeps through the campaign he will win handily..Not because of experience but because of the numbers..
I agree that DiGiacinto will win. A combination of things goes in his favor, including the Dem registration advantage and the low voter turnout that will take place in Bethlehem, since there are not many contested races.
Is Callahan creating a problem for himself for the future by supporting the Republican. Quiet support or not, it is still support.
As chairman of an audit committee all he does is hire a CPA to do the audit and look at the CPA letter of recommendation... that does not qualify him to do anything positive for our city. There is a chance here to do some good.
Why would someone with all of those credentials want a job like this? I'm being serious. Isn't he way overqualified for this position? I guess if he wants it, having somebody with that type of background would be a huge benefit to the city...so I guess he won't win.
He had to know something about audits and accounting to get where he is. You just don't start at the top.
As for why he wants this job. I have some ideas and will post about them in the post in the next week or so.
I really wish Holland's people would stop the negative comments on the blogs. They should really emphasize the postives she can do and how she plans on implementing. Her responses to Bernie O'Hare that his posted on his blog today are very good.
Today's Morning Call reports that Bethlehem has been dipping into its escrow account over the last three years to cover expenses. Is this a good financial practice? Yesterday, I tried contacting both candidates. Unfortunately, I only was able to reach Meg Holland, and was surprised to learn that she was conducting a press conference about that issue later in the day. Here's what she has to say about dipping into an account with funds earmarked for specific projects.
[T]he city’s actual operations in 2006 required additional cash which the city borrowed from various funds at year end and repaid the funds in March 2007. The liability was properly recorded on the balance sheet at year end. The Auditor/CPA at the finance committee meeting stated she audits four other municipalities and they all have borrowed from other funds to cover short falls.
Holland is not so disturbed about borrowing money from an escrow account. But before you conclude she's just a Callahan rubber stamp, she also stated there are two areas that need investigation: 1. Departmental Earnings – revenue was over $447,000 less than anticipated.
2. General Expenses – expenses were more than $476,000 than anticipated.
I also compared the accrual based financials to the budgeted financials and I noted that departmental earnings reported on the accrual basis were over $2 million dollars higher than the cash basis budgeted financials.
I learned through my conversation with the Business Department of the city, that the major variance in departmental earnings is due to the fact that the city’s ambulance receipts collection are delayed. The billing and collections of ambulance services are performed by St. Luke's Hospital for the city. According to my inquiries the receipt delay is primarily due to claim processing problems. As the Controller, I would perform an operational audit of the entire process in order to expedite receipt of the over $2 million in ambulance fees.
The actual general expenses were in excess of the budgeted by $476,000 and is due to delay in medical reimbursements. Apparently even though the city has catastrophic insurance, the city must first pay all medical expenses and then the claim administrator files for reimbursement from the insurance company for the city for all medical expense payments made in excess of $100,000. I was told that the reimbursement checks were finally received by the city in 2007 for 2006. As Controller I would perform an operational audit of the insurance contract and claims processing to determine any inefficiencies.
Lastly, the second management comment is regarding the fact that all purchases are not acquired with approved purchase orders. This management comment has appeared on the city’s audited financial statements for several years because Wally DeCrosta (former Controller) wanted the purchase orders to match the invoices exactly. Therefore, purchase orders were not recorded in the accounting system until invoices were received. Approved purchases orders should absolutely be required and recorded in the system before any purchase is made, by any city employee. This control is to make sure that a purchase by city employees has been approved, budgeted and is necessary. By not requiring this, purchases can occur for purposes not for the city and in excess of budgeted amounts. I would first notify all city vendors that they cannot except an order without an approved purchase order and any invoices received which did not have authorized purchase orders will not be paid. Then I would obtain a listing of past paid invoices for the last five years on these accounts and investigate them for fraudulent activity.
Now, if you can understand what the hell she said, you're better than me. Clearly, she's in another league. And obviously, she's independent. Mayor Callahan surely didn't write that for her. She'd be an asset to Bethlehem.
Labels: Bethlehem, controller, David DiGiacinto, Meg Holland
posted by Bernie O'Hare | 12:00 AM
I hope that it is clear that accounting and auditing and in particular municipality accounting is not simple. Again, my mom has great passion for the City of Bethlehem and will truly be an enormous asset to the city. I also understand that most residents do not understand accounting concepts, as they are confusing. Below I summarize my mom’s comments regarding the City of Bethlehem Audit report in bullet format.
Auditors Statements:
- The auditor (Tracey Rash CPA, partner in charge of the city’s audit from Maher & Duessel Certified Public Accountants) did not say “the City of Bethlehem outspent income”.
- The City of Bethlehem received an “unqualified opinion” or in other words, a “clean audit” (a positive report).
Escrow Fund Borrowing:
- The city’s actual operations in 2006 required additional cash which the city borrowed by various city funds at year end and repaid in March of 2007.
- The liability (of the city’s borrowing) was properly recorded on the balance sheet at year end.
- The auditor stated that she audits four other municipalities and that they all borrowed from other funds to cover short-term short falls.
- The borrowing does not necessarily indicate that the city outspent income and it may indicate a delay in receipts (a timing issue) or non-recurring expenses.
- The accrual based financial statements indicated at year end that revenue was in excess of expenses by over $300,000.
- The city’s budgeted financials are prepared on cash basis
Budgeted to Actual Variances: (pertains to the reason escrow borrowing has occurred)
- Variances between budgeted financials and actual performance should be investigated and used to improve controls and efficiency.
- The two main variances between budgeted financials and the actual performance were departmental earnings (income was $447,000 less than budgeted) and general expenses (expenses were $476,000 more than budgeted)
- Department earnings were less than budgeted due to a delay in ambulance receipts collection from St. Luke’s.
- General expenses were more than budgeted because medical expense reimbursement was delayed. (If an employee incurs more than $100,000 in a year for medical expenses, the city pays the full amount and is then reimbursed for any amount over $100,000)
Purchase Orders (an Internal Control Issue):
- Over the past several years all purchases made by the city were not acquired with approved purchase orders.
- Former Controller Wally DeCrosta wanted purchase orders to match invoices exactly.
- Meg Holland will implement internal controls to change the treatment of purchase orders.
- Approved purchase orders should be required and recorded in the system before any purchase is made by any city employee.
- This control is to make sure that all purchases have been approved, budgeted and are necessary.
- Meg Holland would notify all city vendors that they cannot accept an order without an approved purchase order and that any invoices received which did not have authorized purchase orders will not be paid.
- Meg Holland will also review the last five years on these accounts and investigate them for fraudulent activity.
Thanks for your comments Maureen.
This is the sort of positive commentary that I appreciate and respect. Keep accenting the positives that your mother will do if elected.
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