Performance Audits of Local Governments 1

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1 TOPIC: Performance Audits of Local Governments OFFICE: Auditor STATE: NY DATE: 10/19/2010 QUESTION / ISSUE: The New York State Comptroller's Office, Division of Local Government and School Accountability, is interested in identifying other states that do performance audits of Local Governments and the types of Local Governments you audit. They are interested in the answers to the following questions: 1. Does your agency audit Local Governments? 2. If so, does your agency conduct performance audits of Local Governments? a. Schools? b. Counties? c. Cities? d. Towns/Villages? e. Other municipality? Governments? 6. What is your agency s website? 7. Who should we contact for more information? State Arizona Georgia, we conduct financial statements and A-133 audits for counties and community colleges and we conduct performance audits of school districts. 2. If so, does your agency conduct performance audits of Local Governments? Our enabling statutes require our school district performance audits, the number of which can vary by year, and are for a small portion of all school districts each year. Occasionally, we may get a legislative request to conduct a performance audit of a local government for a specific reason. b. Counties? Only if specifically mandated to on infrequent occasions c. Cities? No d. Towns/Villages? No e. Other municipality? No Governments? What is your agency s website? 7. Who should we contact for more information? For general office-mandate questions, contact Randy Roberts (rcroberts@azauditor.gov); for school district performance audits, contact Ross Ehrick, School Audits Director (rehrick@azauditor.gov), GDOAA performs financial audits of local boards of education. Cities, towns and counties are required to engage a public accounting firm to perform their annual financial audit and the audit report is submitted to GDOAA for review. 2. If so, does your agency conduct performance audits of Local Governments? No a. Schools? No b. Counties? No c. Cities? No d. Towns/Villages? No e. Other municipality? No Governments? None State law requires that Performance Audits of Local Governments 1

2 Louisiana Maryland Missouri GDOAA conduct at least triennially a performance audit of all state funds received by each regional commission (of which there are 12 in Georgia). 6. What is your agency s website? 7. Who should we contact for more information? Edward Blaha, Director, Nonprofit and Local Government Audits Division at or blahaef@audits.ga.gov. In response to the performance audits of local government inquiry, in the Louisiana Legislative Auditor's office, our performance audit law does not mention audits of local government, but our overall office law does. We sometimes go in under our general law and do performance audits, but it is not very common. 1. Does your agency audit Local Governments? We conduct an annual review of Local Government and Community College audit reports (see reports at and We conduct performance audits of each of 24 local school systems once every six years. Other audits or reviews of cities, counties, etc. would be at the specific request of the Maryland General Assembly. 2. If so, does your agency conduct performance audits of Local Governments? See 1 above. b. Counties? Only on specific request of the General Assembly. c. Cities? Only on specific request of the General Assembly. d. Towns/Villages? Only on specific request of the General Assembly. e. Other municipality? Only on specific request of the General Assembly. Governments? Nine for local school system performance audits. No 6. What is your agency s website? 7. Who should we contact for more information? Timothy Brooks, Director of Performance Audits, a. Schools? See * below., under Section of the Revised Statutes of Missouri (RSMo), the state auditor is responsible for auditing counties that do not elect a county auditor (currently 88 of the state's 114 counties). Those audits are conducted under the Yellow Book's standards for performance audits; the state auditor contracts with private sector CPA firms for the financial audits of the counties. c. Cities? See * below. d. Towns/Villages? See * below. e. Other municipality? See * below. * Under Section , RSMo, the state auditor is responsible for auditing political subdivisions such as municipalities, school districts, or ambulance and other special districts upon petition by the voters of those subdivisions. (Those audits are also conducted under the Yellow Book's standards for performance audits. Recurring financial audits of such subdivisions are conducted by private sector CPA firms.) In addition, Section , RSMo, authorizes the state auditor to audit any school district within the state (i.e., not just those that the state auditor is petitioned to audit). Finally, Attorney General's Opinion No. 7, 1983 to Antonio, requires the state auditor to audit all divisions of the circuit court system pursuant to Section , RSMo. Governments? Not applicable. All of the audit staff potentially may be assigned to local government or state agency audits and to performance or financial audits. As of October Performance Audits of Local Governments 2

3 1, 2010, the number of field audit staff was 69 (supervisors and staff auditors), and the number of managers overseeing their audits was 15. Yes. Additional duties of the SAO include: a. Following up on "sunset" recommendations (Sections , RSMo). Two years before a program is scheduled to sunset (i.e., terminate), the state agency administering the program must submit information regarding the continuing public need for the program to the Committee on Legislative Research under the state General Assembly. The committee then holds public hearings and issues a report to the General Assembly with recommendations on whether the program should continue, reorganize, sunset, or consolidate with programs in state agencies not under review. Any recommendations that do not require a statutory change are presented to the state auditor and followed up on during the next scheduled audit of the program to see how the agency has implemented the recommendations. b. Providing standard formats for items that counties are required to file with the state auditor (Sections and , RSMo), including the annual budget for thirdclass counties (Sections , RSMo) and the annual published financial statements of all counties (Sections , RSMo). c. Developing guidelines for the control of state agency capital assets. To accomplish this duty, the state auditor has issued the rules at 15 Code of State Regulations (CSR) d. Providing standard formats for the annual financial reports that all political subdivisions other than counties and school districts are required to file with the state auditor (Section , RSMo, and 15 CSR ). e. Reviewing and registering general obligation bond issues of all political subdivisions (Section , RSMo, and 15 CSR and ). f. Preparing fiscal notes for proposed measures to be presented to voters to amend the statutes or the state Constitution and revising such notes when the state attorney general or the Cole County circuit court determines that they are unsatisfactory (Sections and , RSMo, and 15 CSR ). g. Annually reviewing all tax rates proposed by political subdivisions for compliance with Missouri law (Section , RSMo, and 15 CSR ). h. Reviewing and approving audit reports of certain fire protection districts (Section , RSMo, and 15 CSR 40-4). i. Annually compiling and reporting to the General Assembly the data from the Criminal Activity Forfeiture Act reports submitted by the attorney general and county prosecuting attorneys (Section , RSMo). j. Preparing cost-benefit analyses of certain state Department of Economic Development programs (e.g., those involving tax credits or loans) (Section , RSMo). Note: The statutes referred to above are available at the website and the CSRs at Montana New Hampshire 6. What is your agency's website? 7. Who should we contact for more information? Alice Fast, CGFM, CIA, CPA, Director of Local Government Audits, at (573) , or alice.fast@auditor.mo.gov The Legislative Audit Division does not audit local governments. There is a Local Services Bureau within the Department of Administration that works with local governments (counties, cities & towns, school districts and special districts) to ensure uniform financial accountability, and to assist the local governments in complying with their statutory financial and budgetary reporting requirements, including provisions of the Montana Single Audit Act. The state of New Hampshire Office of Legislative Budget Assistant, Audit Division, has no responsibility to audit local governments, either for financial audits or performance audits. Performance Audits of Local Governments 3

4 New Mexico We started evaluating local school districts a couple of years ago and have completed seven, and are examining three more currently. We also did an evaluation of charter schools and of our two big research universities this year. We have also done evaluations of state funded capital outlay projects that were awarded to local government entities. Ohio Pennsylvania Vermont We do not have dedicated staff to do this and fit these projects into our overall work plan, which includes mostly state agencies and programs. Governments? Current staffing authorization for the Performance Audit Section is 30. Yes. In addition to performance audits, the Auditor of State conducts financial audits of all State agencies and all local governments. We also conduct special audits (investigative in nature, often leading to prosecution and recovery of funds), and technical assistance through our Local Government Services Section. Finally, the Office makes available, typically to smaller local governments, accounting software know as the Uniform Accounting Network. More information about each is available on our website. 6. What is your agency s website? 7. Who should we contact for more information? For performance audit information, please contact Jim Penning at JWPenning@auditor.state.oh.us. (not often) Governments? This varies. As a result of ARRA, we have more auditors devoted to auditing our local government subgrantees than normal. I would say currently we are using auditors. Yes, we conduct performance audits and agreed-upon procedure engagements of other subgrantees (nonlocal governments) and state agencies. 6. What is your agency s website? 7. Who should we contact for more information? Contact John Kaschak, Director, Bureau of Audits, PA Office of the Budget, Does your agency audit Local Governments? Schools, yes. Municipalities: Not formally. We conduct situation reports that are low level, commonsense, not audits. 2. If so, does your agency conduct performance audits of Local Governments? Performance Audits of Local Governments 4

5 Washington, just completed our first using contractor MGT b. Counties? c. Cities? d. Towns/Villages? e. Other municipality? Governments? We have an office of 11 auditors and 3 nonauditors. We have 50 percent of our staff dedicated to performance audits of state government. We contribute to KPMG s responsibility for the state CAFR and A133. We provide trainings to school, state and municipal officials. We perform reviews and audits requested by the legislature, unless they don t add value and we can talk them out of it. 6. What is your agency s website? 7. Who should we contact for more information? Linda.lambert@state.vt.us 1. Does your agency audit Local Governments? The Washington State Auditor s Office conducts financial, single (federal), performance and compliance audits of our state s local governments. Governments? Our performance audit staff (non-clerical) totals nearly thirty. This group of auditors conducts performance audits of local governments and state agencies. Over the last five years, the ratio of local government performance audits to state agency performance audits has fluctuated from 75/25 to 25/75. Recently we have been closer to the 25/75 end of this range. As we move into the future, state agencies will make up an even larger portion of our overall performance audit work-plan. We presently have four performance auditors dedicated to local government performance audits. We are obligated under state law to establish a system of accounting for all local governments. For school districts, we share this responsibility with the Superintendent of Public Instruction. At both the state and local level, we are responsible for investigating any misappropriation of public assets. We perform investigations of whistle blower complaints against state agencies. We are responsible for ensuring our public electrical service providers (cities and public utility districts) comply with state law, which requires investments in renewable energy as well as conservation programs. We also provide occasional training to our local governments, primarily in the areas of reporting and internal controls. Other training focuses on the SAO audit process and what to expect from an audit. 6. What is your agency s website? 7. Who should we contact for more information? Please contact Chris Cortines, our Principal Auditor for Local Government Performance Audits. You may contact Chris at (360) or at christopher.cortines@sao.wa.gov. Performance Audits of Local Governments 5