IG Targets Waste in DC; Opportunities for CYA Software

Posted On January 26, 2009 | by AllenCaron

Last week, the government of the District of Columbia was reprimanded by the Inspector General’s Office over its lack of internal controls or — in more laymen’s terms – shoddy bookkeeping. Items such as duplicate payments and late payments (that lead to higher interest payments) routinely add millions in expense to large organizations and are considered as a cost of doing business in a bureaucratic or otherwise sluggish organization. But the days of such waste being tolerated in silence apparently are over. Every penny in this economy counts and must be accounted for, or at least that is the intention, and the move to CYA (“cover your a**”) is being seen all around the Beltway.

As the IG’s office stated, “The tightening of revenue streams due to falling real estate values, combined with increasingly higher demands on social and support services will place additional stress on the city’s limited resources and heightens the importance of mitigating the risks of financial losses.” http://www.dcexaminer.com/local/012009-Inspector_general_blasts_DCs_internal_controls_on_money.html

The Madoff scandal has rightly raised peoples’ “Show Me the Money” attitude towards finance and financiers, and not only for private investments. It is likely that people will broaden this newfound awareness, and pin their expectations for careful fair dealing  to the taxman.  We think that governments and agencies at all levels will set up internal control guidelines to deal with the much-bruited massive new spending plans. The municipal market, as well as bonding authorities in and around the federal government, present huge opportunities for providers of advanced software to mitigate expense, especially when that expense is simply a matter of neglect and lollygagging.  

One well-capitalized microcap that could benefit from this large opportunity is Dublin-based Trintech Group Plc (Nasdaq: TTPA, http://www.trintech.com/) a leading global provider, with principal operations in Dallas,  of integrated financial governance, transaction risk management, and compliance solutions to healthcare and financial users worldwideHMS Holdings (Nasdaq:HMS, http://www.hmsholdings.com/) provides cost recovery services to government health care programs, enabling them recover over $1 billion annually.  Bottomline Technologies (Nasdaq: EPAY, http://www.bottomline.com/) streamlines, automates and manages processes involving payments, global cash management, transactional documents and invoice approval.  It stands to reason that all 3 companies (and the taxpayers!)  should be poised to benefit from the closer scrutiny that the IG envisions.

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