Are Independent Audits Occurring In Your Local Government?

Former Buffalo Councilmember Brian Davis was recently sentenced to one year in prison for stealing taxpayer dollars that he controlled through discretionary funding that is provided to all Councilmembers.

The Buffalo City Charter states one of the responsibilities of the City Comptroller as:

“The comptroller shall engage an independent consultant to conduct an audit of the performance of the council staff every two years.

All of the audits completed by the Buffalo City Comptroller’s Office since 2002 are listed on the City of Buffalo’s web site. According to the audits listed an “independent” audit of the Council has not been done every two years as required by the City Charter. In fact it appears that the only audit completed of the Council staff in the past ten years was in 2009. The Council staff audit completed in 2009 was done by the City Comptroller and not by an independent auditor as required by the City Charter.

Perhaps an outside auditor would have discovered that internal controls over discretionary funds were lacking and the Brian Davis situation could have been prevented or discovered earlier?

In addition to an independent audit of the Common Council the City Charter requires that:

“The comptroller shall have the power to conduct performance audits of all bureaus, offices, departments, boards, commissions, activities, functions, programs, agencies and other entities or services of the city to determine whether their activities and programs are: (i) conducted in compliance with applicable law and regulation; and (ii) conducted efficiently and effectively to accomplish their intended objectives. In addition to such audits as the comptroller may conduct with his or her own staff, the comptroller shall engage an independent consultant to conduct at least two such performance audits each year.

Performance audits are different than financial audits in that they focus on whether programs are complying with regulations, operating efficiently and accomplishing intended objectives. A review of the past audits listed on the City of Buffalo web site reveals that not a single performance audit has been conducted by an independent consultant as required by the City Charter.

While there is a cost to hiring outside consultants, it is important to have independent perspectives on what is taking place in City Hall. To his credit City Comptroller Mark Schroeder has brought in outside expertise from the University of Buffalo to examine the operations of the Comptroller’s office and they will make recommendations for improvement. That same approach of bringing in outside independent expertise needs to take place in other City Hall departments as required by the City Charter.

Are Independent Audits Occurring In your local government?

www.reinventinggov.org

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Allen Sheaprd

Hi,

Yes – at several different levels. Each year we pass our KPMG audit of IT (knock on wood). The best part is they let us know what will get tougher next year.

An audit should not be surprise. Let people know what to do and they will work in that direction.

It is also a good “house cleaning.”

Tips for the IT world – document, restore and generate reports from the system not memory. Restore files and databases from back ups even if files are not lost. Restore the production system to the test or disaster recovery system every so often.

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Brian Dowling

I would be interested in knowing what the relationship between city council members and the comptroller is? Is the comptroller elected or employed? There is a strategic component to this relationship made apparent in the regulations but there can also be a cultural component in which management slowly adopts practices designed to keep from upsetting the city council and therefore avoid threaten their own jobs. Even independent consultants can fall into this trap. Cities should find new auditors every few years but if the city council is happy and management is happy, why would the independent contractor complain. There is also a problem to my mind with audits being conducted annually as pressures from management and the city council can push efforts one way then the audit comes to push another. Audit ends and slowly the pressure builds up again to go back to the original direction. Greater transparency seems to be a first step but something more than passive transparency.

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