GAO Watchblog ReBlog: What you need to know about Tax incentives and the Federal budget

…not all spending looks the same. Spending through tax provisions—known as tax incentives or expenditures—is not as well-known as other types of federal spending, such as discretionary spending on federal programs, or spending on Social Security and other entitlement programs.

Yet tax expenditures totaled more than $1.2 trillion in fiscal year 2015—roughly what is spent on discretionary federal spending. And they didn’t have the scrutiny of other types of federal spending.

Our peers over at GAO have created a most excellent graph (see below) that clearly lays out what Tax incentives are, how much they cost, and the effect they have on the Federal budget.


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Talkin’ Shop with: David Givans, Deschutes County Auditor

For nearly 15 years, David Givans has served as Deschutes County’s Internal Auditor. The Internal Audit program independently reviews, evaluates and reports on the financial condition, the accuracy of financial record keeping, compliance with applicable laws, policies, guidelines and procedures, and efficiency and effectiveness of operations. Internal audit reports are given to management and used to provide a dialog for constructive change. 

DAVID GIVANS PICTUREDavid started out his career as a bio-chemist. But, he decided it wasn’t for him, and he went back to school to pursue a career in auditing and accounting. It was through his work at the CPA firm Deloitte & Touche in Los Angeles that he was first exposed to internal auditing. David then moved to Oregon and worked with a small CPA firm doing traditional financial auditing work, business valuations, tax and transactional consulting.

Around 2001-2002, Deschutes County officials started discussing the benefits of having a performance auditor. A County Commissioner and Finance Director had been attending a PSU class taught by Drummond Kahn, current director of Audit Services at the City of Portland Auditor’s Office. Because of what they learned in the class, they were excited about the prospects of adding an internal auditor. Adding to the urgency was the discovery of an embezzlement from the County Sheriff. In 2002, the internal audit program was started through the hiring of David Givans. David is a Certified Public Accountant (CPA) and Certified Internal Auditor (CIA).

Internal reports are publicly available online. So far in 2016, reports have been released on juvenile justice, notary fees, DA transition, and others.

About the Deschutes County Audit Shop

The Internal Audit program independently reviews, evaluates and reports on the financial condition, the accuracy of financial record keeping, compliance with applicable laws, policies, guidelines and procedures, and efficiency and effectiveness of operations. Internal audit reports are given to management and used to provide a dialog for constructive change.

In 2002, Deschutes County started its internal audit program and the Board of Commissioners appointed David to provide performance audits. An Audit Committee was developed to provide independence and oversight to the position. The Audit Committee is comprised of four to six members of the public and three County officials. They identify and approve the direction of audits and meet with County departments on audit findings.

What is it like being a single person audit shop?

It’s a bit like being the chef, cook and bottle washer! I am responsible for all of it. I am particularly proud that I have been able to show that single person audit shops can comply with yellow book standards. I have been successfully peer reviewed four times.

I also advocate for small audit organizations and have interacted witMt.Bachelorh many single person audit shops over the years. I’ve found that for single person audit shops in particular, it is important to make sure the organization is set-up well. This means having strong independence and a clear charter. It is also important to have support from your committee or other budgeting authority because you are going to need training and software to be successful.

I use technology to leverage myself— ACL, AutoAudit (electronic work papers), and Excel. This helps to amp up my processing power. I use ACL on most audits to assess department performance. It’s important for auditors to adapt to new technology and to look for opportunities to use it. For example, using the apps on a smart phone or taking pictures during fieldwork.

Aside from the physical resources, making connections and receiving support from peers in other organizations is really helpful. There is so much opportunity here in Oregon to effectively share information and collaborate across levels of government in auditing. And it goes both ways—I’ve had the OAD auditors reach out to me to connect them to County staff for their audits. There are also topics that we as a state can address that are both local and state issues, such as behavioral and mental health.

How do you choose your audit topics?

There are discussions with County leadership and the Audit Committee. I also attend committee meetings and gather information on the departments, which helps me to create a matrix to assess risk. I also consider what topics are timely and relevant, along with what departments have not been audited in a while.

After weighing the factors for their relative significance, an overall risk factor is computed for each area. I also consider staffing-hours, as I typically do four to five audits a year. Each audit ranges in hours from 140 up to 400 hours and report length can vary from a couple of pages to forty pages. After consideration of the number of audit-hours (staffing level) available for the year, those departments with the greatest assessed risk are recommended to the Audit Committee for inclusion in the audit plan for the year.

There are some reoccurring themes I’ve seen come up over the years that I expect to re-visit. For example, the County is self-insured for health insurance, which means we have more risk than contracting out because we handle all the claims and have an onsite clinic and pharmacy. There have been audits on claims processing and the onsite facilities. I’ve also done several audits of the behavioral health topics, looking at client access, business processes, and ensuring compliance.

What are some recent audits you think are particularly interesting?

Well, I am pleased with the Light Fleet Management audit, which received a 2015 ALGA Knighton Award. The audit looked at opportunities to minimize our fleet. In the audit, I found the County had not established written countywide policies, procedures, and guidelines for management of vehicles. This influenced accounting, decision making and management of vehicle resources.

There is also the 2015 Sheriff’s Office Transition audit, in which I was able to see the impact pretty quickly. As a result of the recommendations, the Sheriff’s Office identified a theft by one of its captains.

The follow-up to the County Fair Food and Beverage audit will be released later this year and should be interesting. I will be looking at whether it has been cost-effective to move food and beverage operations in-house as opposed to contracting them out.

A little bird told me you are the president-elect for the Association of Local Government Auditors (ALGA). What have you been up to in that role?

I have a pretty long history with ALGA. When I first started, I reached out to colleagues such as Debbie Taylor, then Jackson County Auditor, for networking and support. Debbie happened to be a charter member of ALGA and was interested sharing her passion for the organization. I have served on the Peer Review Committee from 2004-2007, Nominating Committee 2008/2009, chaired the Survey Committee from 2011-2013, and was Treasurer from 2013-2015.

For the past year, I’ve been serving as President-Elect and my main duty has been planning the ALGA conference in Austin this May, which is actually sold out (there is a waiting list!). In May, I will become ALGA’s president for 2016-2017. You can follow ALGA on Twitter at @ALGA_Gov and there is also a LinkedIn ALGA group.

It was great talking with you! Any parting thoughts?

I feel very fortunate to have found a career that utilizes my skills, is complex and challenging and provides opportunities to contribute to change in my County. I thank Deschutes County for taking steps to assure that I can do my job effectively and in supporting this position. As a leader within ALGA, I strive to be a voice for the smaller audit shops.dc-100yrs-logo

For prior Talkin’ Shop blog posts, see Shanda Miller, Lane County’s New Performance Auditor and Drummond Kahn, Director of Audit Services at the Portland City Auditor’s Office.

Auditors at Work Featured Regional Roundup: Talkin' Shop

Portland City Auditor: Payment Card Data Security Audit

In 2014, the Portland City auditor released a report stating the City was not in compliance with the standard with its handling of payment card transactions.  Now, certified external assessors report that the City complies with the standard.  Outsourcing payment card processing services, improving data security, and discontinuing some payment options for customers brought the City into compliance.

City of Portland Credit Card audit

The City received more than 10 million payments using credit or debit cards last year for water and sewer services, Parks and Recreation classes or permits, and parking – including City-owned parking garages.

The industry standards for security apply to merchants, like the city, that accept credit or debit cards for payment.  Failing tests in any of 12 sub-categories means the merchant fails to meet the overall standard.  Portland was out of compliance for the previous seven years.  Now that the City is in compliance, it will be tested each year by an outside assessor to make sure it continues to meet the standard.

Read the full audit online 

News coverage of the audit

Koin 6  Portland promises it’s safe to use credit cards: City auditor discovered the city failed security requirements since 2009

Portland Tribune Coverage City improves credit card payment security, but work remains

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Multnomah County Auditor’s Office: Animal Services Audit

Our talented peers over at the Multnomah County Auditor’s Office recently completed a review of the Multnomah County Animal Services program. While they found dedicated and hard-working staff on hand to care for the animals, they also identified areas in need of improvement. In particular, protecting animal and human health and safety both within and outside the shelter should be prioritized.

Learn more here, or watch the video the audit team created below:

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Internal Auditor Reblog: The Dangers of Assessing Risk through a Political Lens

I’ve said before that risk assessment is as much art as it is science. There is always a subjective component to risk assessments, and subjectivity is never more evident than when issues are viewed through a political lens.

Richard Chambers, president and CEO of the IIA (Institute of Internal Auditors), discusses the dangers that risk assessments may hold when applied directly to politics, and has a few words of caution for internal auditors on the consideration of politically charged global risk assessments. Read more here!

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Audit Scotland Reblog: Making our data come to life

Ever thinking about the world of auditing ‘cross the pond?’ (Or, in our case, around the desert, over the mountains, through the woods, and THEN ‘cross the pond.) If not, you’re probably not alone. Fortunately for us, and for the country of Scotland, they have a dedicated audit shop with their own blog!

In a recent presentation, Audit Scotland employed interactive Tableau software to better present data on the funding of infrastructure projects throughout Scotland.

“What we found is that the interactivity highlights data and trends that might be missed in a big table of information. Not only does the software make data look great it also does the analysis quicker than what we have done in the past. We are now thinking of whether Tableau could be used to help us scope our performance audits.

We hope this gives people a better understanding of how the public pound is spent in Scotland. And it may help councils and other public bodies make useful comparisons and help sharing of best practice.”

Read more here about Audit Scotland’s first foray into interactive data. You may well be reading about the future of auditing itself; almost anything quantifiable can be presented in creative and illuminating ways. Play with the Tableau presentation itself here.

Click here to read up on Scotland the country, and here to look at even more pictures of Shetland ponies wearing sweaters (or just watch the video below).

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Auditors at Work: (Nearly) Spring Spotlight on Mary Wenger

Once a quarter we will be discussing the wonders of the world of auditing with (you guessed it) actual auditors! Our (Nearly) Spring Spotlight fell on Mary Wenger, long time Deputy Director, and now newly minted Interim Director, at the Oregon Audits Division.

How would you summarize your first six weeks on the job?

‘On the go!’ There is so much to do, and so little time. Many items that normally would occur over several months or at different times have tended to occur all during the same short timeframe. I’m trying to take the time in the middle of all this action to ‘take the pulse’ of the office and the people I work with, and listen.

I thrive on being challenged and like to be busy, but I am looking forward to spring where I can catch up and catch my breath. Working with great people makes it much easier, though.

How did you prepare to take on the tall order of being Interim Director?

In a sense, I’ve been preparing for this for several years in my role as a Deputy Director in the Division.

Over the last several years I have worked with and overseen the functions of the financial team and municipal audits. In order to get up to speed on what was happening on the performance and IT teams, I met with each performance and IT auditor individually. This allowed me to get to know the auditors better and to enhance my understanding of how those teams function.

I also met frequently with Gary Blackmer (former Director at OAD) during his final months here. Working with him and with others in the office allowed me to leverage their knowledge and my transition into the new role has gone well so far. Again, I work with great auditors and leadership who all are driven to do good audit work. They are all helping to make this transition as seamless as it can be.

How long have you been an auditor, and what led you to auditing?

I’ve been an auditor since April Fools’ Day, 1986.

The economy in Oregon was in a downturn when I graduated from college in the 80’s so I begrudgingly looked for work out-of-state. I wanted to get my CPA, and had a choice between a job in Seattle and a job in Sacramento in the Auditor General’s office. I chose Sacramento, and worked there for four years before returning to Oregon and joining OAD in 1990.

Originally, I thought I would eventually move on from auditing to accounting. However, I like auditing! I’m curious, I like challenges, and I like to learn. You are continually learning and you work with other lifelong learners. While there is a process and a structure to our work, it’s not repetitive. Each audit is a whole new learning experience. We work together in a great team environment and we solve problems.

Why is your job important?

Going beyond my role, what we do as a Division is work to improve Oregon’s government and programs. We look at how programs function, how they are managed, and how they impact the public. We audit to determine if programs are operating efficiently and effectively and whether adequate controls are in place to achieve program objectives. Making improvements to those programs helps Oregon better serve the public. The state of Oregon spends billions of dollars each year and our annual financial audit provides the state with our professional opinion about the completeness, accuracy and validity of the state’s accounting information.

As for my job, I don’t consider this a “job” job. It’s something more than that. I like coming in to work every day, even when there is a lot happening. We are always working on ways to improve what we do, while at the same time we are proud of the work we have done.

What do you do when you’re not auditing?

I have a busy household! I’m the ringleader of a circus- I have four kids. I try to keep up at home, travel, read, and explore Oregon. As a family, we like to camp and travel and have visited several states. Last year I was fortunate to travel abroad with my two oldest. Amongst our travels we went to Wengen Switzerland where the Wengers are originally from; breathtaking! I’ve recently started birdwatching; it has been interesting to notice things about those little critters that I never stopped to notice before. I really enjoy moments spent outdoors, away from electronic devices, where I can take a peaceful pause and admire the beauty of nature, even on a cloudy or rainy day!

What do you hope to achieve in your time as Director?

I’m always striving to improve what I do and what the division does so I’ll continue that effort. I think it is important to take the time to reflect, reevaluate, and reprioritize so I’ll continue those efforts as well. In my role, it’s important for me to be in tune with people, to function in the here and now, and to encourage everyone to do the best job we can. I want us to keep doing quality work, and to always strive to do even better.

Final thoughts or words of advice?

I would encourage each of us to focus on being the best communicator we can be. I have found over the years that improved communication, both on the receiving and giving ends, would have resulted in better outcomes. Oftentimes the lack of/too much/wrong type/delayed communication doesn’t produce optimum results. Take a moment and really audit your communication style. Communication involves so much more than the written and oral word. It also involves active and patient listening as well as body language. You’ll know what I mean when you raise four teenagers! We all process things differently, some sequentially and some not, so we really need to be aware of our communication style as well as the individual(s) we are communicating with. I’ll be working on my communication skills for many years to come!

Mary Wenger, OAD Interim Director

Mary Wenger, OAD Interim Director

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