Audit Scotland ReBlog: Audit Scotland goes global

Scotland’s financial devolution settlement is complex and ever-changing. Our health and social care services have gone through a sustained period of reform, and they continue to face demographic challenges. Community empowerment legislation is changing the way local decisions about services and public spending are made. Add in Brexit and talk of a potential further referendum on Scottish independence, and Scotland makes a fascinating case study for the people charged with tracking public money from our fellow audit institutions overseas.

 

Learn more about how our compatriots ‘cross the pond are handling the ongoing social and economic changes in Scotland here.

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Talkin’ Shop With: Kip Memmott, Oregon Audit Division’s New Director

About Oregon Audits Division

front_desk_OAD2

The Oregon Audits Division, or OAD, is one of six divisions under Oregon’s independently elected Secretary of State. Oregon is the only state where the state auditing function falls under the Secretary of State. Our approximately 70 professional auditors conduct financial, performance, and information technology audits with the support of two operations staff. In addition, we investigate allegations we receive on our Government Waste Hotline, and monitor the financial audits of Oregon municipalities.

In addition to Audits, the Secretary of State also oversees the state Archives, Elections, and Corporations Divisions. These four divisions are supported internally by our Information Services and Business Services Divisions. Each division is headed by its own director, appointed by the Secretary of State.

Welcome to OAD! What are you most excited about as OAD’s new director?

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Our impact potential.

Over the next couple of years, I think we have the ability to increase the impact of our audits and value to Oregonians, including educating citizens about what we do as auditors.

I truly believe that governmental auditing is one of the last bastions of objective analysis, free of partisan bias. That’s especially important in the political reality of the national landscape today. Within this context, I take my responsibilities very seriously and am honored to serve in this role.

How you see the Audits Division’s role in state government and your role within OAD?

I see OAD as the external auditor for the state, here to add value, enhance transparency and provide assurance. Through the state constitution, the Secretary has independence and broad authority to conduct audits of state agencies. Our primary stakeholders are the citizens of Oregon and it is our responsibility to report our findings to decision-makers and elected bodies to help guide their decisions. As such, citizen-centric reporting is a cornerstone of our audit strategy. The agencies we audit are of course key stakeholders, but the distinction is that we are do not serve as their internal auditors and do not report to them.

I see two primary roles for myself as director. One is to knit together our culture—our professional auditor staff and the elected Secretary’s Executive Team. In doing this, I need to ensure there is a strong communication approach and implement change management strategies to increase our impact and visibility. I think we can do this internally by focusing on process improvement, reporting enhancements, and staff development and externally (at least in part), by reaching a wider audience with our audit work and products. Second, it is my job to help build trustful and collaborative relationships with the agencies we audit. I have been holding very successful meetings with state agency directors and have been attending department internal audit committee meetings as an initial step.

Any surprises so far at OAD?

Well, there are a couple. First, I knew coming in that the staff at OAD were good, but in the past couple of months I’ve learned that they are not just good, they are elite. The variety of their academic backgrounds, their passion for the work, and their credentials combine to create incredibly high quality teams in all our sections— financial, performance, and information technology auditors

I was less pleasantly surprised by the governmental environment in Oregon. Honestly, there appears to be less transparency than I would have hoped in the state, and less inclination towards accountability than I expected. I have also been disappointed at the strong political reaction to our audit work. OAD is completely non-partisan yet it appears that our work is often viewed from a partisan perspective. This is not surprising but disappointing. I will be working hard to change this dynamic as the citizens are not well served with in this paradigm.

Oregon State Capital Building

What was your first job?

I’ve been working since I was 11 years old. My very first job was as a paperboy in Salt Lake City, Utah. I’ve also worked in fast food, at a movie theater, ski resort, and managed an auto parts store.

Newspaper delivery, food service, movie theater, ski resort, auto parts… Auditing? How’d you get here?

I was interested in accounting and business in high school, and participated in the Future Business Leaders of America program. I started out as an accounting major in college, but it never felt like a good fit, so I switched to U.S. history. I went on to study U.S. History and Public Administration in graduate school at Arizona State University (Go Devils).

It was in grad school that I was first exposed to performance auditing, through an internship with the GAO in Washington, D.C. Did you know federal agencies have historians? They do! My internship with the GAO was in this capacity. I researched and wrote a paper on the history of GAO’s audit team staffing approaches. As part of the internship, I participated in a two week training for GAO performance auditors.

My next internship was with the Arizona State Legislature. I served as an analyst for the House of Representatives Minority Caucus and staffed two committees during the session, Economic Development and Agriculture. It was a great experience and I was offered a full time position after my internship, but I did not take it.

The ASU Grad School Dean, an important mentor to me, suggested I look into the Arizona Auditor General’s officenot because I’d ever want to have a career as an auditor, but because it would enable me to have a bird’s eye view of the different agencies in the state and determine which ones I may be interested in pursuing a career as an administrator. .

I took his initial advice, and a job with the Arizona Auditor General. However, I never looked back.

What other audit shops have you worked at? 

I spent seven years with the Arizona Auditor General, working my way up into management. I left Arizona in 2000 and spent some time in the private sector with a consulting firm in California before taking the internal audit manager position with the County of San Diego. I was there until 2007, when I accepted the Audit Director position with the City and County of Denver, Colorado’s Auditor’s Office. In 2016, I relocated to Oregon and briefly served as the Chief Audit Executive of the Oregon State Treasury before becoming Director of the Audits Division just a couple of months ago.

All the audit shops I’ve worked in had teams of dedicated audit professionals. Auditors seem to be wired the same way— driven, curious, big thinkers who want to change the world.

The shops I’ve worked in have all had different reporting structures. I have worked as both internal and external audit capacities and reported to elected officials, legislative bodies, and operational management (e.g. Chief Financial Officer). I have also reported to audit committees. Audit function governance structures impact audit strategy and risk appetites. Arizona tended more towards risk aversion, which can be the nature of a legislative audit shop. In Denver, unique challenges and culture due to having an elected auditor meant we operated in a very politicized environment. I had to manage political pressure around our findings and reports if and when they conflicted with political agendas.

Kip is quoted in a recent Internal Auditor Magazine article about public sector auditors facing such challenges, including retaliation.

Most memorable audits? 

I have two, and for different reasons. The first one was with the State of Arizona Office of the Auditor General, a performance audit of the state’s Department of Gaming in 1999. This audit epitomized everything performance audits can be.

american-indian_az_reservationsIt was a challenging audit. There’s no criteria on what tribal relations “should be” like and the issues between the American Indian tribes in Arizona and the state government were deep and concerning. As a historian, I brought my knowledge of American history to the audit, which is essential to understanding tribal relations in our country. The audit was controversial from the get-go and looked at governance of the agency within the context of a state that had a history of poor tribal relations. Tribal gaming started in Arizona, and federal laws allow gaming but require a compact between the tribe and state, which allows some state oversight of casinos.

However, the audit found the Department of Gaming was “leaning” heavily on the tribes in ways that were not within their compact, did not add value, and without real cause— as there were good controls in place and no evidence of organized crime. Yet they were strong-arming tribes, showing up to casinos with their badges and guns.

We recommended that the state adhere to their compact with the tribes and essentially back-off. The recommendations we advocated for were based on evidence, but our stance was not politically popular. I presented the findings and recommendations to the legislature and while they were initially not well received, recommendations were implemented that overall, helped tribal relations in the state.

Another memorable audit is the one at the City and County of Denver in 2008 under my leadership, a performance audit of the Emergency Medical Response System. It was heavy on data analytics— a million calls over 5-6 years. We looked at response times and as a result of the audit, the EMR System underwent a Lean process and now the response time is two minutes faster. Two minutes are huge when it comes to life and death situations.

What audits are you most looking forward to?

The two big areas of my audit strategy, or focus, as director are public health and safety, and human services and vulnerable populations. Aside from being interesting areas, these are places I think audits can have more immediate and definitive impacts.

I also plan to conduct audits of legal marijuana, an exciting and high risk emergent public policy. In Denver, my office released the two first municipal performance audits examining aspects of legal marijuana in the nation and they had tremendous, positive impact.

What’s your biggest challenge on the horizon?

There’s two challenges for me. Internally, it’s executive effective change management and continuous improvement within OAD— to align our current processes and reporting approaches with what I see as our impact potential. Externally, it’s building relationships that foster trust and collaboration with the agencies we audit and ensuring we effectively interact and communicate with a wide range of stakeholders, including, perhaps most importantly, the citizens and residents of this great state.

Favorite part about living in Oregon?

The people. I think most transplants would agree with me on that one. It is also a beautiful place to live, (and I have lived in some beautiful places) with a little bit of everything. There are mountains to ski on, trails to hike, the ocean…. And everything is so green!Oregon Welcomes You

Personal motto?

Think Big. Go bold. Think big and take on the big issues, don’t shy away from them. And go bold with strategy and direction. Government auditing is a noble profession. I am honored to work for the elected Secretary of State and to lead such a talented and committed group of audit professionals.

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Introducing OAD’s Auditor Alerts

If you follow local news, you’ve probably seen mentions of (or perhaps even read) our office’s first Auditor Alert, which was released on May 17, 2017.

The Auditor Alert, The Oregon Health Authority May Be Providing Medicaid Benefits to Ineligible Recipients, discussed substantive risks related to Medicaid eligibility determination.  This flexible reporting tool supports the Division’s goal of promoting transparency and accountability to improve Oregon government. Alerts provide decision makers with critical information so they can take action to address substantive issues in a timely manner. Alerts are also aligned with the Division’s citizen-centric reporting philosophy in that they apprise the public of critical matters in a timely fashion.

Here’s how Alerts work: our auditors occasionally uncover information during an agency audit that requires an immediate course correction and is considered too urgent to be delayed until an audit’s completion. In other instances, as in the case of the Medicaid Alert, the Division is apprised of an issue that is not within the scope of any current audit activity. In these instances, the Secretary of State may issue an Auditor Alert describing the finding, its importance, as well as give the agency and the legislature recommendations for immediate action. These Alerts are issued in a manner that is fully compliant with Government Auditing Standards.

The Division will continue working every day to ensure that state government is functioning to benefit all Oregonians. We will continue to use flexible tools and innovative reporting practices, such as Auditor Alerts, to accomplish this goal.

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The Scales of Time

This post is in honor of May being National Historic Preservation Month

Two years ago, our former director Gary Blackmer wrote about Oregon’s long history of auditing.  He outlined how Oregon’s territorial statutes of 1854 called for an auditor to report recommendations “for lessening the public expenses; for using public money to the best advantage; for promoting frugality and economy in public offices; and generally, for the better management and more perfect understanding of the fiscal affairs’ of the state”.

One of those recommendations was to provide sufficient resources to the state penitentiary. Territorial auditor B.F. Bonham noted in 1857 that “The amount appropriated by the Legislative Assembly ($2,500) annually for the support of the penitentiary department, is wholly inadequate for that purpose, and must be increased unless a reorganization can be effected”.  In 2017 dollars, the amount allocated would be approximately $70,000 per year, which I think we can all agree would have been wholly inadequate to operate a state prison.

Oregon’s founding fathers designed our constitution with accountability and independence in mind based on our territorial experience. Drafted in 1857, Oregon’s constitution calls for the Secretary of State to be the “auditor of public accounts”.

In 1897, Secretary H.R. Kincaid reported on what could now be termed a performance audit and certainly the earliest known audit from our office. The Secretary was concerned the state was purchasing paper without verifying the quantity of paper received.  Secretary Kincaid reported “Soon after taking charge of this office I bought a pair of scales for the purpose of weighing paper which is purchase by weight for the public printing.  The first lot of paper received for the state printer after the scales were obtained fell short of the weight charged in the bill several hundred pounds, amounting to about nineteen dollars, which sum was deducted from the bill.  Since then full weight has been required.  This has no doubt saved to the state many times the cost of the scales.  Previous to the time mentioned thousands of dollars work of paper had been received and paid for ever year on bills of shippers without being weighed here to verify the correctness of the weight charges in the bills”.

Recently, I was at the Oregon office of Publishing and Distribution. While there I saw a small historic exhibit with some old printing equipment and some very old scales.

And wouldn’t you know it, one of the scales had a serial number dated 1890.

From a report from the State Treasurer in 1897, the state made several disbursements to the Howe Scale Company (Thank you Google for digitizing the book and making it text searchable and thank you Treasurer Phil Metschan for the excellent transparency of Oregon’s expenditures). The largest disbursement to Howe Scale company was for $71.50, which matches the report by Secretary Kincaid since the scales cost more than what was saved on the first weighing ($19.00).

Given all of the evidence, from the Secretary’s report on purchasing two scales to a corresponding the serial number date (these scales were made in Vermont and would have taken a long time to cross the country or sail to the west coast), and the Treasurer’s report showing a payment to Howe Scales that matches the Secretary’s report, it seems more likely than not that this scale is one of the pair H.R. Kincaid used more than 120 years ago to do some innovative performance audit work.

The scale shown above cost roughly $22.50 according to this 1900 catalog. The scale’s current value – priceless.

Ian Green, CGAP and OAD Principal Auditor

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Auditors at Work: Spring Spotlight on Nicole Barrett

Once a quarter we will be discussing the wonders of the world of auditing with (you guessed it) actual auditors! For this installment we talked with staff auditor Nicole Barrett, an eight-year veteran of the Secretary of State Audits Division. She loved performance auditing so much, after a brief hiatus in  California she returned to the Secretary of State’s office to do more great work!

What is your professional background?

I graduated college with a theater degree and worked in theater for seven years. There was a point that I felt that I needed more. I looked around for graduate degrees that focused on nonprofit management, because I thought that was where I wanted to be. At the time, most nonprofit degrees were connected to Public Administration programs.

What got you into performance auditing?

I took a Policy and Process course in grad school at Portland State University where we traveled to Washington D.C. to learn about the work that public government employees do in different federal agencies. On that trip we visited the Government Accountability Office. I came out of that meeting, thinking, “That’s what I want to do!” This was my first exposure to performance auditing. I liked that this profession could affect change–auditors work to make government better. From there on, I shifted from my goal of pursuing a career in nonprofit management to working for the government.

A classmate told me that there is an agency, the Secretary of State that does similar work to the Government Accountability Office (GAO) in Oregon. I interned in fall 2002. April 2003 I was hired as a Staff Auditor 1. I left in 2009 for family reasons, but returned in 2015 because I loved the work and the work environment at the Secretary of State’s office.

What do you love about performance auditing?

In our office we have a structure to our audits that I like. We are very team oriented. We can separately do parts of the audit work and then come together. I am an external processor so a team environment really works for me. And, things are constantly changing. There is a constant flow of new and different task. . In this office you get experience doing a lot of different aspects of auditing. The work that we do challenges me—it stretches and grows my mind. My husband says I get really energized from my work and I think that is true.

On the other hand, for me the scoping phase can be a challenge because at times it feels undefined and is less structured. Reading administrative rules and statutes is not my favorite part—I don’t have the legal mind for it. Other people on my team really enjoy these types of aspects, so that is helpful.

What is one audit that really stands out for you and why?

I really liked the cell phone audit I did years ago. It was a multi-agency audit. We did some interesting work with data. It identified and brought areas of both under-utilization and overuse to the agencies’ attention. And, that audit had a good impact.

What is it that excites you about working for the government?

I believe for the most part, people are drawn to government work because they want to serve. That really resonates with me. Time and time again I see good people doing good things in government—their heart is in it.

When you are not in the office, how do you like to spend your time?

I love being with my friends, drinking coffee…going on walks, with friends to drink coffee. Seriously though, my husband and I enjoy seeing plays in Ashland and the Portland area, as well as attend lectures.

 

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City of Portland Audit Services: Financial Condition Report released

As part of our Regional Roundup beat, we are starting to feature the work of other audit shops. Check out the recent financial condition audit released yesterday by the City of Portland Auditor’s Audit Services Division. 


Portland Audit Services DivisionThe Financial Condition report, produced by the Portland City Auditor’s Office every other year, focuses on historical trends over five years and allows decision-makers to visualize the City’s course, consider options, and make adjustments to improve the City’s long-term financial health.

Portland Spending

Auditors found that although Portland’s financial condition is stable, the City must address long term challenges.

Some City assets are losing value faster than the City can make repairs.  While the City is making significant investments in water, sewer and stormwater assets, most transportation infrastructure is in fair to poor condition.

Portland Construction

The City has also seen a declining net position – partly due to increased liabilities, such as the City’s pension system for police and fire, as well as policy changes for the Oregon Public Employees Retirement System.

Report highlights

Read the full report


Have an audit you would like featured? Let us know!

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Speaking Truth to Power (Users): Why data visualization matters to researchers, auditors, and program evaluators

“I’m not a data visualization expert, but I am a data visualization enthusiast” Rebecca Brinkley joked as she started her presentation on including visual elements in reports to the State of Oregon Research Academy (SORA).  Several dozen researchers from around the state listened intently as she walked through the importance of including visual elements and gave examples from recent audit reports from the Oregon Audits Division.

Why Visuals Matter

“Our brains are visual processors not word processors” explained Rebecca Brinkley. Most people think visually rather than verbally.  Furthermore, visuals have been found to be processed at a much higher rate than text alone.  The visual elements help the reader process complex information and improve retention.

Many times visuals can help tell a story or make a connection that would be more difficult to do using text. For example, Rebecca highlighted this image of the water cycle in a recent report on water management in Oregon.

waikato

I don’t know about you, but I’d much rather see this image describing the water cycle than reading a long paragraph describing the water cycle.

We will be highlighting some more example of useful data visualization techniques in future blog posts.

Rebecca will also be presenting to the Pacific Northwest Intergovernmental Audit Forum in March.

Ian Green, CGAP and OAD Senior Auditor

Ian Green, CGAP and OAD Senior Auditor

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