WILL BCIC BE SUBJECT TO AN INTERNAL AUDIT LIKE GBIC?

Special to El Rrun-Rrun

In the face of mounting criticism on the way that the Brownsville Community Improvement Corporation (BCIC) has conducted business which has resulted in the awarding of grants to board members and their families and business associates, the City of Brownsville Auditor is expected to recommend to the city's Audit and Oversight Committee that – just as they did with the Greater Brownsville Incentives Corporation (GBIC) – an audit be conducted examining their Standard Operational Procedures (SOP) in giving away its share of sales-tax generated money.

With the rules for grant applicants changing almost daily, the audit could determine whether there is any SOP used at all or if the rules are left up to the discretion of the BCIC board and its administration.

As a result of the GBIC audit, the city's internal auditors filed a report that showed that GBIC under then-CEO and Executive Director, and now city manager, Helen Ramirez, a dismal due diligence had been performed on two companies which were not required to prove a business history or their principals thoroughly vetted, and were allowed to self-report without proper scrutiny.

The auditors reported that GBIC gave away more than $750,00 to two companies – Spaced Ventures and 9Point8 Capital – which were found to be in non-compliance with their contracts and that no jobs were created for city residents as required by the GBIC bylaws.  

That audit report was performed by City Auditor Keilah Folkerstma, Deputy City Auditor Jose Luis Silva, and Assistant City Auditor Daniela G. Gonzalez and found that although the auditors reviewed the hundreds of pages of documentation retrieved by GBIC, they reported that it was not clearly documented what the application and screening process looked like or how it should have looked at the time of occurrence Ramirez signed the 9Point8 Capital agreement.

Further, they reported that it was not clear who should have taken those steps and who should have documented that they were taken, or who should determine that sufficient evidence was gathered and reviewed.

In the compliance audit report, they state that: "We did find a note indicating accepting self-reporting from the grant recipient would be acceptable in determining compliance. We deem the internal controls were inadequate because of the lack of policies and procedures and reliance on grantee self-reporting."

 The proposal to move up an audit of the BCIC will be under the agenda item of Ongoing audit(s) by the city auditor and will be considered by the Brownsville Audit and Oversight Committee at their meeting to be held today at 12:15 p.m. at the City Commission Chambers, located on the Second Floor-City Hall/Federal Building, located at 1001 East Elizabeth Street. 

Its members are Mayor John Cowen, At-Large-B commissioner Rose Gowen and Brownsville resident Francisco Orozco.

Following an inquiry by a private citizen and small business owner, BCIC CEO and Executive Director Cori Peña emailed the city auditor to explain the difference between an internal audit and an external audit.

Dear Keilah,

"I have a quick question. Is the BCIC organization audited every year? I asked the CFO and he said yes, but the citizen that made a public comment at the commission meeting last week, has been told we haven’t been audited in a few years. I’m asking for clarification.

Was the audit of GBIC’s funding for 9point8 considered a different type of audit? I’m just curious is there are different types and the citizen is referencing maybe a specific audit. Any feedback is greatly appreciated."

That, in turn, elicited this reply from Folkerstma: 

Hello Cori,

"I was asked by a commissioner previously and answered based on internal audit and BCIC hasn’t been audited since before 2020, but it’s been on the list to be audited by us since FY 2021. So yes, it’s likely they are thinking of our internal audit like we did for GBIC because I had a couple of people ask me about if when we had last audited BCIC. I never considered they might not be familiar with the difference between internal audit and financial audit done by the external auditors.

Mr. Delmore would be speaking of the external financial audit. I was planning on contacting you this week before our Friday meeting with the Audit and Oversight Committee because we’ve had a couple of people express concerns that bring it further up the list so I wanted to see if you could share any policies or procedures you have so we could do some preliminary planning. I’ve also developed an entity wide risk assessment I’ll need your input on before fiscal year end.

I’ll forward some information on the risk assessment from the office."

Folkerstma and Peña were responding to several complaints regarding the awards and how past boards have applied their SOP of BCIC monies and how it came to be that board members Felicia Fruia, Michael Limas, Arturo Trevinio were board members at the time they received grant money as did some of their immediate family members . Critics charge that some of these board members had an economic interest and gained economic support from BCIC.

According to the City of Brownsville's Code of Ethics, Chapter 38, city officials and city boards' members are prohibited from taking any official action that would affect their, or their relatives', economic interests.

Has the BCIC followed the code, or have they winged it and justified handing out money to board members, their families, and businesses in which they have a substantial economic interest?

It's obvious that past BCIC boards have crossed the line under the pretext that the board has a discretion to stray away from the code's prohibitions on self dealing. Will the Audit and Oversight committee board members draw the line in the sand on BCIC?

Or will they turn a blind eye to what is clearly a transgression in the BCIC's SOP against the city's code of ethics?