The City of Chicago Office of Inspector General (OIG) has released a follow-up report to its August 2021 audit of the City’s process for designating municipal depositories. Based on the Department of Finance’s (DOF) responses, OIG concludes that DOF has partially implemented the recommended corrective actions related to the audit findings. These changes help ensure the City has a better coordinated and more transparent designation process.
Banks designated as depositories hold and pay interest on funds deposited by the City and the Chicago Board of Education, essentially serving as the City’s checking accounts. The purpose of the 2021 audit was to determine whether DOF ensured that banks applying for municipal depository designation submitted the required information and whether DOF used the information to ensure that the City designates institutions that not only can fulfill its banking needs but also provide inclusive and equitable financial services for Chicagoans.
“Access to financing is critical to a community’s prosperity, but inequities in lending patterns persist across Chicago’s neighborhoods. With these and continuing changes, DOF will be better equipped to partner with banks that serve all of Chicago’s communities, including and especially those which are historically underserved,” said Deborah Witzburg, Inspector General for the City of Chicago.
OIG’s original 2021 audit found that although DOF ensured that banks submitted all documentation required by the Request for Proposals (RFP) process for municipal depositories, it did not evaluate whether the applicant banks provided inclusive and equitable financial services throughout Chicago. Furthermore, OIG found that DOF, City Council, and the City of Chicago Treasurer’s Office had not coordinated their roles in the municipal depository designation process to achieve the City’s inclusivity and equity goals.
Among other recommendations in the original report, OIG recommended that DOF collaborate with the City Council and the Treasurer’s Office to develop a coordinated municipal depository designation process that aligns with the City’s equitable banking goals and allows the City to deposit public funds in banks that share and live up to those goals.
In its follow-up inquiry, OIG finds that DOF partially implemented the recommended corrective actions from the audit. Specifically, DOF formed an Evaluation Committee with staff from the Council’s Committee on Finance, the Treasurer’s Office, and the City of Chicago Department of Housing to ensure that RFP submissions are complete. Furthermore, DOF revised its RFP language to reflect updates to the City’s Responsible Banking Ordinance and published applicant banks’ responses through the Chicago Data Portal.
Read the full follow-up report on the OIG’s website, bit.ly/DOF-DepositoriesFollowUp. The Municipal Depositories Process audit with recommendations and departmental response was published on August 31, 2021, on the OIG’s website, Audit of the Municipal Depository Designation Process.
The mission of the independent and non-partisan City of Chicago Office of Inspector General (OIG) is to promote economy, effectiveness, efficiency, and integrity by identifying corruption, waste, and mismanagement in City government. OIG is a watchdog for the taxpayers of the City and has jurisdiction to conduct investigations and audits into most aspects of City government. If you see corruption, fraud, or waste of any kind, we need to hear from you. For more information, visit our website at: www.igchicago.org.