Wednesday, March 26, 2008

A Watchdog with Teeth

Monday, in a press release, mayoral candidate Paul Goldman urged moving the City Auditor’s functions to the office of City Treasurer where it would be immune from political pressures. In Mr. Goldman’s words,

[W]e need a truly independent auditor, someone who never has to worry about whether he or she might lose their job due to pressure from the politicians on City Council or in City Hall on account of any audit project.
Therefore, I propose that the City Treasurer be given the city auditor function, thus transferring that legal responsibility to an independently elected official accountable to the people.

Although I agree with Mr. Goldman that the auditing function should not be subject to political pressure, I do not think that the City Treasurer, whose primary job is to assure the collection of state taxes and their transfer to the Commonwealth, is the right official to oversee the auditing function.

But wait, Maven, why do we need an auditor at all. Isn’t it all just bean-counting?

Dear reader, I and thousands of other residents of River City pay beaucoup bucks in taxes to support our government. We have a right to expect that our elected and appointed officials will use that money lawfully and efficiently. As explained in the Government Auditing Standards, issued by the Comptroller General of the United States:

· Public officials and others entrusted with handling public resources … are responsible for applying those resources efficiently, economically, and effectively to achieve the purposes for which the resources were furnished. This responsibility applies to all resources, whether entrusted to public officials or others by their own constituencies or by other levels of government.
· Public officials and others entrusted with public resources are responsible for complying with applicable laws and regulations. That responsibility encompasses identifying the requirements with which the entity and the official must comply and implementing systems designed to achieve that compliance.
· Public officials and others entrusted with public resources are responsible for establishing and maintaining effective controls to ensure that appropriate goals and objectives are met; resources are safeguarded; laws and regulations are followed; and reliable data are obtained, maintained, and fairly disclosed.
· Public officials and others entrusted with public resources are accountable both to the public and to other levels and branches of government for the resources provided to carry out government programs and services.

Auditing is the public function that assures that all these responsibilities are being fulfilled. By reviewing and reporting on government operations, the public auditor enables taxpayers to feel confident that their tax money is being properly spent.

Richmond’s City Auditor is appointed by the City Council under section 4.18 of the City Charter and may be removed by the council under section 4.14 of the charter “for any lawful reason or no reason.” Mayor Wilder has repeatedly used this fact to charge that the auditing function is politically motivated. The mayor has objected to the City Auditor, Umesh V. Dalal, auditing the executive offices of Richmond government rather than Richmond Public Schools, where Mr. Wilder “knows” that all the fraud, waste and corruption are hiding. In a blistering letter last summer, Mayor Doug attacked Mr. Dalal for his “effrontery” in demanding access to the records of Deputy Chief Administrator Harry Black. Mr. Dalal defended his independence by saying, "Neither the mayor nor the council tells me what to do. [The mayor] is the one insisting that I be independent of the council. That means I have to be independent, period."

The City Council changed things a bit this week by assigning inspector general functions to the City Auditor. Ordinance 2007-285-2008-67. The inspector general functions are defined in the ordinance as:

1- To audit, inspect, evaluate and investigate the activities, records and individuals affiliated with contracts and procurements undertaken by the City and any other official act or function of the City.
2- To conduct criminal, civil and administrative investigations relating to the municipal affairs of the City.
3- To engage in preventive activities, including, but not limited to, (i) the review of legislation, (ii) the review of rules, regulations, policies, procedures and transactions, and (iii) training and education.
4- To refer matters for further civil, criminal and administrative action to appropriate administrative and prosecutorial agencies.
5- To conduct joint investigations and projects with other oversight or law enforcement agencies.
6. To issue public reports.

The ordinance also creates the Inspector General Oversight Board for the purpose of monitoring and overseeing the inspector general functions of the City Auditor. In addition to reporting on the activities of the City Auditor, the board will have a role in the possible removal of the auditor from office. The ordinance provides:

(2) Prior to any removal of the City Auditor, the Council shall forward a copy of the resolution introduced to effectuate the removal of the City Auditor along with a written statement of the reasons for the removal to the Board for review and recommendation.
(3)The Board shall review the resolution and the reasons given for the removal and shall hold a public hearing on the matter before voting on a recommendation to remove or not remove the City Auditor.

This purpose of this procedure is described as establishing and maintaining the independence of the inspector general function. However, the ordinance does not change the fact that under section 4.14 of the City Charter the council may still remove the auditor from office with or without cause.

I really won’t comment on the wisdom of expanding the auditor’s functions to include criminal investigation. I think it arises from a misconception by the council that criminal activity is the main cause of misspent government funds. In fact, most misspending of government money is caused by poor management, not crime. Further, having worked for an audit agency that added a criminal investigation unit I can testify that most of the time it was more trouble than it was worth.

I’m also not sure that the Inspector General Oversight Board provides sufficient independence for the City Auditor. So long as the auditor is hired and fired by the City Council s/he is subject to political pressures. However, I don’t think that Mr. Goldman’s idea that the auditor be elected by the people is the answer.

I propose the following as the best way to protect the independence of the City Auditor:

1- The term of the City Auditor should be set at a definite term, say seven years;
2- When there is a vacancy, the City Council would prepare a list of three candidates for the position;
3- The city’s Chief Administrative Officer would then appoint one of the people from the City Council’s list as the City Auditor;
4- The City Auditor could only be removed from office by the City Council and then only for cause.

Loyal reader, I’m not sure that guarantying the independence of the City Auditor is enough. Nor do I think that adding the inspector general functions to the auditor’s plate will make much of a difference. The problem is that no matter how big a watchdog we buy, it will not be able to protect the public fisc unless it has real teeth. Regardless of the powers that it assigns to the City Auditor, unless it also provides adequate funding for the office, the City Council will have accomplished nothing.

If you remember, two weeks ago Mayor Wilder’s budget proposed significantly reducing funding for the city auditor. Of course, the mayor’s proposal is absurd. However, merely funding the auditor’s office at this year’s level is clearly not enough.

In the article “Auditor's work, staff don't add up” last December, Times-Dispatch reporter Michael Martz indicated that the auditor’s office was operating with only half of its ten budgeted professional staff. The City Auditor was unable to hire additional staff because of inadequate salaries, competition from other jurisdictions and concern over turmoil at City Hall. David Ress’ TD article this Tuesday indicates that the auditor’s office is still operating with only five professional staff.

By adding the inspector general functions to the City Auditor’s office the City Council has assured that Mr. Dalal can not do his job adequately even if he is able to fill all the vacancies on his staff. I can’t see the auditor’s office doing all the auditing and investigative work that the council has assigned to it without a professional staff of at least twenty people. If the City Council is serious about protecting the taxpayer’s money it must appropriate sufficient funds to the City Auditor’s office to provide our watchdog with strong and sharp teeth.

1 comment:

Paul H said...

I think Umesh Dalal is the most important appointed official in Richmond. Imagine having effronty to audit the city administration as well as the school board. One way to stife an investigation is to gut the department as LDW has successfully done so far. The auditor's office is slated for reduced funding under the Mayor's proposed budget. I wonder why?