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By Diana Diamond

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About this blog: So much is right — and wrong — about what is happening in Palo Alto. In this blog I want to discuss all that with you. I know many residents care about this town, and I want to explore our collective interests to help ...  (More)

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Palo Alto needs a new auditor NOW

Uploaded: Jan 27, 2020
Palo Alto has been without a permanent auditor for 11 months. Why should we care? Why even bother with an auditor?

Our city is doing a reasonably good job, many say, so why should we pay anyone and provide a staff of three or four to investigate the city’s operations and to report to the public what’s working, and more importantly, where the city is failing in its responsibilities?

Why bother? Because a good auditor is like a good detective, and police departments and city councils need good detectives to keep things in shape.

We had an auditor, Harriet Richardson, until last Feb. 20, when she resigned under some clouds. We still don’t have a new one.

Why has it taken so long to hire a new auditor? “It’s complicated,” former Mayor Eric Filseth told me in November. I know there was disharmony between Richardson and her staff, and two of her employees filed official complaints against her. Those remained unresolved when Richardson quit. The city hired a consulting firm to advise them what to do, Kevin W. Harper CPA & Associates came up with recommendations that have encountered some static. Late last year, the city appointed a consultant, Don Rhoads, to oversee the auditor’s office. The city is still trying to decide what to do next. A council discussion slated for Jan. 21 was postponed.

But an outsider is not the answer. As former city auditor Sharon Erickson has said, a city needs to have an inside auditor who know the people on staff, know their attitudes, and as a auditor, can hear all the gossip and rumors in the halls of city hall that will help decide where there are real problems. A consulting auditor cannot have such intimate knowledge.

The most egregious recommendation from Harper, in my opinion, was to have the council decide on a dual-reporting arrangement for an auditor –the auditor would be hired and fired by the council, as now exists, and also the auditor would continue to report to it.

But – and that’s a big but – the auditor would also report to the city manager who would provide administrative oversight such as "review of time sheets and expense reports, consultation about timing of audits based on operational considerations, and involvement in discussion of cost versus benefit decisions of audit recommendations," according to the Harper report.

That’s a terrible idea. Not only does the city charter state that the auditor should report only to the council, but having the auditor also report to the city manager is akin to that proverbial fox guarding the henhouse.

How can the auditor independently criticize wrongdoings at city hall when the manager is in charge of all departments? Anyone reporting in part to a city manager will be well aware of the CMs status, and may downplay some of the auditor’s findings so the manager will not get upset.

And what if there is a dispute between the city manager about what to audit or how much a certain audit costs? Who’s going to win that dispute – the manager or the auditor? Will the council override the city manager because of a one dispute from the auditor? I doubt it. The council members know they need someone to run the city more than they need an auditor to investigate the matter.

The Harper recommendations drew a negative response from the Institute of Internal Auditors, a national organization that develops guidelines for auditors, which caused it purports to comply with the standards of the Institute of Internal Auditors. The institute itself was quick to distance itself from the recommendation to have the auditor report to the city manager for administrative oversight, according to a Weekly story.

The Association of Local Government Auditors, a national auditing group, made a similar point in its Dec. 19 letter, which argued that Harper relied on internal standards that are oriented toward the private sector rather than governing auditing.

Sounds like the city hired the wrong consultant (Harper) to solve its auditor problems. But finding a solution is not rocket science. Squabbles need to be settled and a new chief auditor can get his or her team to function better.

We residents need to have an auditor as soon as possible – like this February. Or, the city council has to tell us why there has been such a long delay, so we can better understand a year’s wait to hire someone. We need an auditor and his/her team to guard the operations of our city. Period.

Local Journalism.
What is it worth to you?


Posted by Hoover, a resident of Palo Verde,
on Jan 29, 2020 at 9:57 am

Having an independent auditor that reports to the board is the only right answer. You don't need a consultant to tell you that. The only reason to hire a consultant is when you want a wrong answer for some reason, and to get an "independent" recommendation to do the wrong thing.

Posted by Independent, a resident of Esther Clark Park,
on Jan 29, 2020 at 11:12 am

Appoint an auditor now. The city charter calls for it. Why is the one position that watches over our tax dollars the only one not to be appointed?

Posted by Kaufman, a resident of Charleston Meadows,
on Jan 29, 2020 at 8:53 pm

"It's complicated," former Mayor Filseth said in November. It is not complicated to hire an auditor. Richardson has been gone for a almost year. If she was the problem, they would have started recruiting to replace her as soon as she left. So that statement likely means it's complicated to fix the underlying issues in the office, which means addressing issues with staff who are still there.

Posted by Mark Weiss, a resident of Downtown North,
on Jan 30, 2020 at 11:15 am

Mark Weiss is a registered user.

This is fodder for people running against the incumbents in the next election.

Posted by Sally, a resident of Downtown North,
on Jan 31, 2020 at 2:11 pm

This role and office report directly to City Council.

This fiasco falls squarely on their shoulders, from the existence of the problem to its pathetic handling.

Council was MIA on successfully managing Ms. Richardon. Council was cowardly and played "punt the football" on managing personnel issues. Council was MIA on successfully managing the consultant (in the punt attempt) down to that person not knowing our City Charter or the prevailing auditing standards.

I would ask the Weekly to ask every council member where they stand on this, asking tough follow-ups so we know where they stand. I have seen so little leadership from this group.

Posted by Annette, a resident of College Terrace,
on Feb 1, 2020 at 9:44 am

Annette is a registered user.

Fully agree with DD's conclusion. As for what happened w/the previous auditor, my guess is the previous CM contributed to that situation.

Posted by Malachi Constant, a resident of Crescent Park,
on Feb 1, 2020 at 9:49 pm

I agree. We keep hearing complaints about the City of Palo Alto process for almost everything, and yet nothing changes, in fact it gets worse because they hide behind the last screwup like they are trying to make things worse by a little bit every time they do something. We need a new auditor at the very least, and we need complete transparency. We need to find new contractors to work with and a lawyer who can write ironclad agreements that do not get thrown back in our faces every time there is a conflict. So many apologists for sub-mediocrity, whatever happened to our civic pride and demand for excellence.

I think this has a lot to do with farming out all our services to contractors so we supposedly save money, and yet in the end we seem to get higher prices AND worse services.

The airport sits there underutilized and annoying everyone with their flyovers and making most of the Baylands a horror for any kind of recreation because of the never-ending take-offs and landings ... and the Baylands just rots away into decrepitude, while the CONTRACTORS who work there shuck off their jobs and the facilities are miserable.

Face it, the contractor thing has not saved and has also not helped our community sustain and support itself or even look at itself with pride.

Posted by Sharon E., a resident of Barron Park,
on Feb 11, 2020 at 10:25 am

Sharon E. is a registered user.

Diana and all,

It is with deep disappointment that I must report that the Palo Alto City Council last night rejected pleas to hire a new city auditor. Instead the council voted 7-0 to prepare an RFP soliciting consultant audit services and outsourcing the city auditor function. Palo Alto voters created the independent office of the city auditor in 1983 to serve as an internal watchdog over city operations. For the last 37 years, the office has provided council members and the public with independent, objective performance audits. The future of the office has been in dispute since a May 2018 finance committee vote to eliminate 5 of the 6 staff positions in the office and outsource all audit work.

Sharon Erickson (Palo Alto City Auditor 2001-2008)

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