Where Does the Money Go Next?

P R O F E S S I O N A L . . . C O N T R O L L E R S

by Adrian W. Hollander, C.P.A., CISA, CIA, CBA, CFSA,
President of COMPLUS Inc. – Professional Controllers

Whenever a government spending program is announced, the benefits (and beneficiaries) are widely publicized. A new school may be to benefit a neighborhood. A new road may be to benefit a region. A space program may be to benefit mankind. There is a money path to follow which is usually ignored, though. Private and public sector transactions are different. In private sector transactions customers supply the money and choose their vendors. The exchanges are based on private “value for value” propositions. When government is involved, though, the direct beneficiary of the project is seldom the money provider. The prerogatives of the purchaser are not the same when comparing private and public sector buyers. The private sector buyer is spending his own money for his own benefit. Public sector buyers are representatives. It’s not their money, and the individuals involved should not be just benefiting themselves.

Especially in public sector transactions it’s very important to ask, “Where does the money go next?” When taxpayers are the sources of the money, we must demand that there are “public interests” to be served, not just by completing the project, but also to whom is money paid. When “public money” is spent, the “public” has a legitimate interest in how. Anything less than full disclosure should be unacceptable. Some questions to ask about each project besides just about the nature of the result are

Who is the “prime” contractor?
Who are the sub-contractors?
Who are the workers?
From where do materials and supplies come?
When do vendors get paid?

And if applicable ----

Why are “out-of-towners” selected?
Why is local labor not being used?
Why are materials being imported?
Why are payments being delayed?

Tie scores should go to “my friends,” but it has to be at least a tie. Paying more to get less is nonsense. But -- building infrastructure in an area doesn’t necessarily bring prosperity if the contracts are given to outsiders who immediately take the money out of the local economy.

Except for development of weapons systems and matters of national security, which should be issues applicable only to the Federal government, anyway, there should be no secrets involving government procurement. Where does the money go next? We have elected officials who can be held accountable at regular intervals.

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