Mesa gives auditing oversight to council

Most government auditors develop a thick skin and tuck away a copy of the “Bureaucrat’s Guide for Accountability Avoidance” somewhere in their back pocket.

The guide was modeled like a David Letterman joke and provides a top ten list of excuses that can be used by politicians and office managers when an auditor comes bearing bad news. The list suggests, for instance, that a bureaucrat can “imply the auditor is incompetent and well-meaning, but not well-informed.”

Some of those words were pretty familiar in Mesa a couple of months ago when city auditors dug through the books at the Mesa Arts Center and found that employees had given out 17,000 complimentary tickets for concerts and other events last year and in many cases didn’t properly record their distribution.

The findings made headlines at a time when Mesa officials were trying to reform their audit policies to make the government more transparant to elected officials and the public alike.

Mesa will soon hire a new city auditor who will report directly to the City Council. It will mark the first time in the Mesa’s history that members of the council will have a hand in deciding which departments to audit each year.

Council members have narrowed the list of candidates to three finalists who each have been interviewed in closed-door sessions. Acting city auditor Gary Ray is one of the finalists. The city will not name the others.

Whoever gets the job will be in charge of the four-person audit department and will be responsible for regularly briefing the council on the city’s internal problems. In previous years, the council was not told publicly which departments were scheduled to be audited and did not automatically look at the auditors’ findings.

That will be a drastic change from previous years when the council was not even briefed about which departments were slated to be audited each year. Some council members barely had a chance to read the Mesa Arts Center complimentary ticket audit after the media questioned them about it in January because the audit had just gone public.

“The (annual) audit plan was not brought to the City Council, and there was a possibility that something could not get to us,” said councilman Rex Griswold.

“Are we being good stewards of the taxpayers’ money if we can’t tell the citizens we’re checking?’”

Audits are an important tool for cities because they ensure compliance with laws, help improve efficiency and detect fraud. But when audits make headlines, they can be embarrassing to city officials.

Last year, Mesa was hit by a string of stinging audits. One of them led to the criminal conviction of a city employee caught stealing money from the softball program run by Mesa’s parks and recreation division.

Another audit revealed the city has made several errors during the past few years in the amount of money it collects from developers for building impact fees. Yet another detected the lack of oversight over comp tickets at the Mesa Arts Center.

Since 1989, the city’s auditor has reported to the city manager, who has used the internal probes as an tool to improve the city’s operations. But that creates potential political challenges for auditors, who are responsible to put the spotlight on problems within their supervisor’s operations.

While that’s not necessarily a bad model, some auditors including Mesa’s Gary Ray said the new concept will be better because it includes another set of checks and balances that will give city auditors more independence.

From now on, three council members on a new Audit and Finance Committee will help establish the annual audit plan and will ultimately review the final audits before they are passed on to the full council.

City Manager Chris Brady will serve as a non-voting member of the Audit and Finance Committee to provide input and keep abreast of what’s going on in the city’s operations. Ray called this new procedure the “golden standard” of audit models.

“The City Council will employ both the city manager and the city auditor. There’s an independence there,”

said Ray. “We’re reporting to the council on the executive branch.”

Mesa voters approved the changes, which were packaged on the ballot in last year’s city election. It was billed as a way to ensure the city would have more oversight over taxpayer money.

Prior to 1989, Mesa actually had what’s considered by professional auditing standards to be the least desired model because the auditor reported to department heads and not the city manager.

Jim Williamson, the president of the Association of Local Government Auditors, said auditors who report to the city council can often act more independently.

“The lower in the organization you go, the less independent the auditor is,” he said.

Phoenix uses an audit model in which the city auditor reports to the city manager, but also is supervised by an independent audit committee. That way, auditors can keep their independence and avoid the politics that can come into play when elected officials are involved, said Randy Spenla, Phoenix’s top auditor.

“That’s a risk. When I talk to my peers across the country, there are different city auditors where that’s a bigger part of their day-to-day operations than it is for our department,” Spenla said. “The purity of the audit function can get corrupted a little bit.”

Over the years, Ray said he has approached various city managers requesting the city implement an audit committee similar to Phoenix’s, but he met with no success until the changes went to the ballot.

“I don’t care if you have a city manager or a city council model,” he said. “If you have an audit committee that makes those documents public, that’s a good model.”

Mesa has tentatively budgeted $358,000 for the new audit department next year, which will be comprised of three auditors and one administrative support staffer, Odom said. That’s still less than half of the audit staff for cities of comparable size, such as Oklahoma City, Albequerque and Colorado Springs.

Still, audits are by nature sticky subjects. A department and staff undergoing a review of their work is akin to the IRS coming in and looking at someone’s taxes.

And in sensitive areas, there will often be people who question how the auditor did his job.

Dennis Kavanaugh, a former Mesa vice mayor and chair of a private foundation that supports the Mesa Arts Center, said the audit that found the comp ticket bookkeeping flaws suggested widespread abuse when it’s normal for performing arts centers to give out a lot of free tickets.

For instance, many of the tickets went to various media outlets to market the shows.

“The impression was that the city was doing something bad by having a complimentary ticket policy. Comp policies are a given, and auditors need to understand that. The issue is can you track it and make sure there wasn’t abuse?”

Auditors are used to tip-toeing around sensitive issues. That’s why every so often they need a little dose of “auditor humor.”

No one knows that better than Ray, who regularly keeps a copy of the “Bureaucrat’s Guide for Accountability Avoidance” in his notepad “just for fun.”