City auditor may lose autonomy

Palo Alto City Hall, 250 Hamilton Ave.
Palo Alto City Hall, 250 Hamilton Ave.

BY SARA TABIN
Daily Post Staff Writer

Palo Alto City Council will consider outsourcing city auditing and having the auditor report to the city manager rather than council.

The auditor is supposed to be independent of the city manager, according to the city charter. If council wishes to change the charter, it would have to put a question to voters to do so.

Palo Alto has not had a full-time auditor since Harriet Richardson left in February, which opened the door for council to consider changing the job.

Councilmen Eric Filseth and Tom DuBois and Councilwoman Liz Kniss listened to a report about the city’s auditor position from Kevin Harper, of accounting firm Kevin W. Harper CPA & Associates, in a council committee meeting last week.

Auditors traditionally report to city council, but Harper said having the auditor communicate with the city manager as well as council could increase teamwork in the city.

Costly audits

Harper conducted a survey, which was sent to 12 Bay Area cities and counties, and found that Palo Alto’s $508,426 internal audit budget is the second highest of comparable cities. He said outsourcing some audits might save the city money.

Harper said during the meeting that Palo Alto’s cost might be higher because the auditor office does other jobs, like overseeing the contractor who does the city’s citizen survey.

Former auditor calls foul

Sharon Erickson, who served as the city’s auditor from 2001-2008, said the auditor should only report to the council, not the city manager, to ensure that the auditor is independent from the rest of the city.
The City Charter, a document similar to a constitution, says in Section 20 that “the offices of city manager and auditor may not be combined.”

In Section 12, the charter says, “The city auditor shall conduct internal audits in accordance with a schedule approved by the city council and may conduct unscheduled audits from time to time.”

It wasn’t clear, based on council’s discussion last week, how the offices of auditor and city manager would be kept separate if the auditor reported to the manager. It also wasn’t known how an unscheduled audit, as described in the charter, could take place if the city manager oversees the auditor’s office.

No decisions were made at the meeting, but the council members indicated that they are interested in outsourcing audits. The document will go before the full council in January.

8 Comments

  1. The system right now could work better. Council gets the reports, makes pleasant but non-committal comments, and the audits are filed in the round folder. The solution here isn’t removing the teeth of the auditor but adding more teeth. And of course it costs more in Palo Alto. What doesn’t?

  2. Why would residents agree to eliminate a check-and-balance on city spending? Why would council risk a lawsuit for violating the charter?

  3. @Two questions – the council would do it to please the staff/public employee unions who want no accountability for their actions, no one overseeing overspending and who do not want anyone questioning overgenerous pension benefits, among other reasons. Look forward to filing a lawsuit against the city council if they proceed. Anyone else in to help me?

  4. City managers do not want an auditor reporting directly to the City Council. In Mountain View, voters were tricked into approving a charter amendment years ago that legalized the scam of appointing the city’s finance director to be the “city auditor.” The finance director reports to the city manager. Outside audits are limited by the same city staff. Those limited audits include disclaimers – declaring that no real auditing has been done. Most city council candidates and office-holders are afraid to ask questions and the local press and electorate are so easily fooled that the practice continues.

  5. The year-end audit done by the outside firm is a financial audit. The Auditor’s Office does performance audits, which look at making operations more efficient and effective, but if you look at their website, they haven’t produced much since Ms. Richardson left. What would you expect them to produce if they report to the City Manager? Agree with Jane that changing the structure may result in a lawsuit, but agree more with Max R that the better approach is to add more teeth. That can be done by asking voters to strengthen the City Charter – Define in the Charter that the office will do performance audits in compliance with the Government Auditing Standards and define management’s responsibility for implementing the recommendations within a certain time frame so they don’t go into the round folder. The office should not be doing work such as overseeing the contractor that does the city’s citizen survey, and language could be added to the Charter to avoid the office doing work like that also.

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