Umesh Dalal has a penchant for finding ways to save money – big money –that would make major corporations green with envy.
Since moving to Richmond more than two years ago to take over the City Auditor’s chair, Dalal has released dozens of reports. An audit of the school system found ways to save upwards of $20 million a year. Perhaps the most notorious audit turned its sights to the fleet program, finding that employees were using the city’s gas stations as personal filling stations, often going several times a week and filling more than their gas tanks could hold. And more recently Dalal found ways to help the City save on its procurement process, finding that many departments were not putting out contracts to bid, instead categorizing the purchases as emergency. Possible savings; $6 million.
Dalal, a short and energetic man, is also a former small business owner. He owned a Quiznos franchise in Texas, and has also run a small accounting firm. BizSense spoke with Dalal last week to see what sort of recommendations he might have for the area’s small businesses.
RBS: Are city employees helpful in talking to you about your audits and providing you with the information you need?
UD: Yes they do. Typically people want the system to improve. And you have to believe that most of the people that work in a department or division want their work conditions are improved and that their work products are improved. That’s just human nature. Everyone wants to do good job.
RBS: How important is fear in terms of keeping employees from stealing or wasting public funds?
UD: (The proper procedures are) a deterrent. It’s very similar to why you lock your door when you go out. Do you really think a thief cannot break it? If you keep it open, those people who are not skilled enough to steal could get enticed. So if you have procedures that somebody is looking over what’s happening, then the person who’s thinking of perpetrating fraud, waste and abuse, is more reluctant. That’s not necessarily true for those who are determined to perpetrate fraud, waste and abuse. But that’s why we have detailed auditing.
RBS: You started a Fraud Squad, where people can call in tips and receive up to $5,000. How’s that going?
UD: (We’ve gotten) some solid tips. Whenever we publish an investigation, we get a flood of them. Then it dies down, but every time we issue another investigation we get another set of complaints.
The idea is that we are asking the public to help us help you. Because when it comes right down to it, we are watching your tax dollars. If don’t want your tax dollars to be subjected to waste, help us.
RBS: Some business owners examine the local government before choosing where to relocate or where to set up a new office/plant. How do you think audits affect how business owners view Richmond?
UD: Well, the more important thing is what is good for the city. Every organization has flaws. So it might be good idea to recognize those flaws so an organization can move to the next level. It’s like going to a doctor. You want to find out what is wrong with the body. You don’t want a shortcut. It may be painful, but once you know what is wrong, you can address what is wrong.
RBS: What’s your experience in small business, and what are some things you learned from it?
UD: I can tell you, I have owned a few small businesses. We owned a Quiznos franchise in Texas. My wife has owned a couple of gift shops. We even had an accounting practice with three employees.
The trick in running a small business, you have to be conservative on costs and very cognizant of the customer service aspect. Many businesses make mistakes cutting down advertising to cut cost. That’s a bad idea. Businesses have two major costs; inventory and labor. As long as they watch inventory, and make sure inventory is being used with the least amount of waste, and your labor is fully occupied, then your business will do OK.
RBS: Do you miss owning a business?
UD: Not really. I owned a business, but my wife ran it. Now we are taking a break.
RBS: How can businesses without full-blown auditing departments look for savings?
The thing is, there is always going to be dishonestly, and small business will have lot less controls. The owner or the managers can only go so far. What they have to do is create an environment that somebody is watching. If they’re running a business involving inventory, they can install security cameras or install security door alarms so access is controlled to only certain times of the day.
You also need to make sure labor is properly accounted for. See that the labor is accounting for eight hours, ten hours, or whatever amount of time you are paying them for. Then, you need to look at the outcome of their work. Does it benefit the business?
Also – advertising. Many time businesses chose to cut advertising because business is bad. Guess what, business is not improving because you’re not letting people know of its existence. When business is slow, you have to put more money into advertising.
Once you get people in, you provide them with the best customer service you possibly can in order to keep those people.
RBS: Where else might businesses look for extra savings?
UD: Cooperative purchasing is available. Many small businesses purchase from Sam’s club or Costco and sell it at retail, that’s another form of cooperative purchasing. For every little expense, shop to save. It should be very similar to how you run your home.
RBS: If we might ask a personal question, do you find it hard to spend money personally considering you spend all day looking for ways to save money?
UD: (smiles) What it is, you have to have balance between life and how your saving; money is not always answer. You need to live life, too.
RBS: And how did you get into auditing?
UD: I was born to audit. In college, the first time I was seeking employment, I got an internship in a public accounting firm. After graduating I got my certification in India in what is called chartered accounting. I then came to the United States and got into government auditing, and for the last 23 years I’ve been a government auditor.
I love to audit. You may not hear that a whole lot, but I love to audit. I’m very … sensitive to the use of public dollars. I do believe, generally, that the common man has a very little voice in how government happens. They have very little assurance about whether monies are properly safe-guarded and used only for purposes they give the government money for.
RBS: Any other tips for area businesses?
UD: Businesses and business owners are so busy, sometimes they either overlook or sometimes for saving money don’t comply with laws. That is a very expensive proposal. If you have to pay sales tax, pay sales tax in a timely manner. Pay income tax in a timely manner. Pay license fees in a timely manner, and inspections as needed.