City Councilmember Carl Stokes (D-12th District) has proposed an ordinance requiring audits of every city department every two years.
“It’s about transparency as well as accountability,” Stokes says. “The city has been going through an economic roller coaster—well, it’s actually been all downhill the last few years. So at times like this, we should look closer on what we’re doing, how we’re doing, whether we are getting good use of the dollars that we’re spending.”
Stokes’ bill would require an audit every two years of every city agency, to be done by either city auditors working from Comptroller Joan Pratt’s office or outside, independent auditors. Five councilmembers, including Council President Bernard C. “Jack” Young (D), signed on as co-sponsors at the March 19 council meeting where it was introduced.
But in a lunch meeting earlier that day, Deputy Mayor Kaliope Parthemos expressed vehement disagreement with Stokes, according to two people who were present. “The Mayor’s office was less than enthusiastic at the lunch-time meeting about some of the examples that Carl used,” said one councilmember who asked not to be identified.
Stokes’ example was the Department of Recreation and Parks. Two years ago, Mayor Stephanie Rawlings-Blake’s transition team recommended an audit of that department, but never received it. Stokes says Rec and Parks’ financial records were in such disorder that no audit could be performed. Pratt’s accountants offered to help the department put its books in order, but then could not audit them because of the inherent conflict. The process stalled on the question of how to pay for an outside audit, Stokes says.
“Councilman Stokes made incorrect assertions about Rec and Parks’ ability to be audited,” Rawlings-Blake’s spokesperson, Ryan O’Doherty, says in an e-mail to City Paper. “The Mayor addressed it herself at the meeting.” O’Doherty did not respond to a follow-up question asking what part of Stokes’ account is wrong.
“Without pointing any fingers, we didn’t get an audit done,” Stokes says.
In another e-mail, O’Doherty says, “The Mayor fully supports routine auditing of all city agencies. The Comptroller’s Office is the City entity charged with auditing agencies and auditing activities, per the City Charter.” Regarding scheduling, the charter says only that such audits should be done “at appropriate intervals.”
According to the comptroller’s web site, five audits have been released so far in 2012, including the blockbuster audit of city water billing practices that has resulted in the city’s promise to refund more than $4 million in overbillings to consumers. There were 10 audits published in 2011, 15 in 2010, and 19 in 2009. In those years, the War Memorial Commission was audited three times, as required by state statute. There were no comprehensive audits of the Police Department, the Department of Public Works, or the Department of Housing and Community Development. Those three city agencies have a combined annual budget of about $900 million—about 30 percent of total city expenditures.
The War Memorial Commission has a budget of about $400,000. Public Works spends 1,000 times that each year. It spends 10 times the War Memorial Commission budget just cleaning vacant lots and boarding up buildings.
Regularly scheduled audits are routine in most governments and nonprofits, Stokes says: “It’s not an unusual thing. I ran a charter school for about 300-some students. Every year we had to do an audit, cost us $10,000 or so.” The state of Maryland audits all departments every three years, he says.
According to a spokesperson at the city of Philadelphia comptroller’s office, that city audits each city agency every year “as required by our home rule charter.”
Ross Tate, Maricopa County, Az. auditor and president of the Kentucky-based Association of Local Government Auditors, says he is not aware of any “best practices” relating to the frequency of internal audits. “Most internal audit shops will use a systematic risk assessment to determine where, and how often, audit resources should be applied,” he writes in an e-mail to City Paper. “Consequently, departments with high-risk functions will be scheduled more frequently, and will be audited more thoroughly than others. Risk is usually measured in terms of dollars, citizen impact, legal liability, data security, etc.”
“I thought it was a perfectly reasonable request, suggestion, idea, however you want to characterize it,” Councilmember Bill Henry (D-4th District), who co-sponsored the bill, says. “There is language in the charter about the comptroller having the authority to audit city agencies . . . but I am unaware of any schedule [for audits].”
Henry says good performance audits tend to pay for themselves by saving money that otherwise would be spent inefficiently. The comptroller’s web site says audits saved about $5 million in taxpayer funds in 2009 and 2010.
“I’m hoping we use the comptroller’s office as part of this process,” Councilmember Bill Cole (D-11th District) says. “I don’t want to usurp the comptroller’s power, or duplicate efforts already done.” He notes that the comptroller’s office recently added several positions after a budget bump last year.
The mayor’s proposed budget for next year, however, reduces the comptroller’s budget. “The Fiscal 2013 recommendation is $165,402 (4.2%) below the Fiscal 2013 current service level budget,” the document, released Wednesday, says. “Three vacant positions will be abolished. Current service levels will be maintained.”