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By Diana Diamond

Why does it take so long to hire an auditor?

Uploaded: Aug 20, 2019

Public perception of how a city is handling a problem can be almost as important as how the city really is solving the problem. And the Palo Alto City Council now has both a perceptual and practical problem about why there are such delays in hiring a new auditor – and why this is such a “complicated” issue, as Mayor Eric Filseth told me.

Why should we residents care at all? Because the auditor’s office, if properly functioning, is a watch guard over city performance. The auditor reports to the city council not the city manager, because the auditor serves as the public’s eyes and ears, keeping track of how the city functions, and investigating what works and whether things are dysfunctional.

The auditor is one of only four council-appointed city officials, along with the city manager, city attorney and city clerk. Right now, Palo Alto doesn’t even have a permanent auditor, only a temporary outside part-time consultant, Don Rhoads. Former Auditor Harriett Richardson announced last December she was quitting, and left in February.

I talked to Filseth about the delay, and he said it’s a “complicated issue.” However, the council has recently decided to hire Kevin Harper CPA and Associates, for an “organizational review” to look at how other cities use their auditor, to determine best practices, and to see if some of the auditor’s responsibilities should be placed under the city manager’s control. Cost so far: $32,780.

The Auditor’s Department is one of the smallest departments in the city with a $1.2 million annual budget —a drop in the city’s $210-plus million (and rising) general fund budget.

But there’s a rub here, because some council members have been uncomfortable with the auditor’s office for a while, for unexplained reasons. I’ve heard rumors that the office was too slow in getting reports in to council. Last year Councilmember Greg Scharff tried to cut the budget (ahem) by getting rid of the auditor’s staff of four and keep just Richardson in place. He proposed contracting with an outside firm for auditors.

Former Palo Alto Auditor Sharon Erickson (now San Jose’s auditor) came to the rescue and said that hiring outsiders would be a disaster. An outside firm would not know the players or the local problems, would spend time and city money to understand them, and would not know staff loyalties and internal politics. Luckily, her view prevailed, as the public also got upset at the proposal of outside auditors.

Last November Richardson produced an audit of the city's code-enforcement program, which found that the program is marred by “unclear roles and responsibilities” and that the city's records “do not provide reliable and useful information for management decisions.” That’s important for the public to know because code enforcement has been a problem.

Another Richardson audit was on the city’s attempt to have a business registry program. It had been a sad, unproductive attempt for several years. Richardson’s report said it had "inaccurate, incomplete and inconsistent data," and offered recommendations.

And four years ago she did a report on the city’s animal services operation, and reported that the animal shelter was "outdated and does not meet modern standards of care." The review, according to the Weekly, “spurred the city to seek a partner for managing animal services – a long and complex process that the City Council finally completed in November when it approved a contract with the nonprofit Pets In Need to manage the city's animal services.”

But this CPA firm has also been directed to see if some of the auditor’s responsibilities should be under city manager control. That, to me, would be a terrible mistake – the city manager should not be in charge of auditing himself or his staff. That’s like the fox guarding the hen house. City managers don’t typically don’t want somebody prying into seeing how they and their departments are working. It’s a circle-the-wagons philosophy that oftentimes prevails.

Filseth said the CPA report should be completed by the end of the year and the council will then decide on whom to hire as the next auditor and whether to have the auditor report in part to the city manager. The city’s charter states the auditor reports to the council.

I don’t understand why a consultant’s report on other cities won’t be ready until the end of the year or why a new auditor can’t be hired in the interim. Filseth said things “take time” in the city, but a whole year?

An auditor’s office is important for any city, because it helps keep the city honest. The independence of the auditor is sacrosanct, and a city manager should not be involved in the office’s operations. An auditor is essential in helping keep the city’s operations transparent – and honest.