GAO WatchBlog ReBlog: Updating Government Auditing Standards – The 2017 Yellow Book Exposure Draft

The Yellow Book is the book of standards and guidance for auditors and audit organizations, outlining the requirements for audit reports, professional qualifications for auditors, and audit organization quality control. Auditors of federal, state, and local government programs use these standards to perform their audits and produce their reports.

Today’s WatchBlog discusses the proposed updates, and explains how you can help!

We know. You’ve been waiting on pins and needles to read the 2017 Yellow Book Exposure Draft. Boy, we sure have!

Read more here to learn about the proposed revisions to the Yellow Book. If that’s just not enough, you can find an online version of the exposure draft here, ready to be perused at your leisure. The GAO is also seeking comments on the current exposure draft through June 6th, so you’ve got just over six weeks to compose a masterful letter on why and how the exposure draft does (or, perhaps, does not) meet your auditing needs and expectations. You can send those comments to YellowBookComments@gao.gov.

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ELGL RePost: Your department has been selected for an audit

So your department, office, division, or program has been selected for an audit. You and your coworkers might be worried that a team of humorless scolds is coming by to tell you how to do your jobs. But have no fear! As auditors, our job is to work with you to make whatever you do more efficient and effective, so that all of us can provide the best service possible to our residents. Also, we have a great sense of humor.

Sam Naik, who works for the Office of the City Auditor in Austin, Texas, eloquently summarizes for Emerging Local Government Leaders (ELGL) what we as auditors do and what agencies that are involved in an audit can expect before, during, and after an audit. It covers the standards we follow, the planning process for audits, fieldwork, and reporting, as well as follow ups after the audit.

This is a great read for anyone that fears an audit may be coming down the pike for their agency, for those interested in becoming auditors, and for those who just want to have a better understanding of what an audit looks like and what it can achieve.

Read more here.

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TeamMate Solutions ReBlog: 5 critical steps to applying data analytics

Consistently seen across available literature are five common steps to applying data analytics:

  1. Define your Objective
  2. Understand Your Data Source
  3. Prepare Your Data
  4. Analyze Data
  5. Report on Results

Each of the steps are critical and each step has challenges. Understand and overcoming the challenges requires a deeper look into each step…

Toby DeRoche, a Market Consultant with TeamMate, outlines how auditors can think more deeply about the five steps to effectively analyzing and reporting on data. Read more here!

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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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Insights for auditors

I have been subscribing to a series of newsletters by Harvard professor Bob Behn for many years now. Behn teaches in the Kennedy School of Government. They cover many topics that touch on our audit world: accountability, performance, measures, management. The one-pagers are an interesting quick read on topics about government performance.

Behn has a good eye for the pragmatics that interfere with the best laid plans of policy makers and executives.

His narratives often bring in ideas and experiences we encounter in performance auditing, though he has raised a few questions about the profession. He wrote about one hearing he attended in Olympia in 2008 about a performance audit of the state’s transportation department, produced by contractors Ernst & Young. He learned about specific cost savings identified by the auditors but didn’t get a sense of the agency’s performance, and seemed to have an idea of what was missing:

“For a performance audit, however, what is the equivalent of the financial rules? Who has set what expectations for performance for which the auditors can check”?

It’s clear that Professor Behn comes from a measurement viewpoint, because he seems to want a target or expectation as a basis to gauge performance. The intent of performance auditors is to spot a solution or strategy that improves an organization’s performance, and results. We don’t grade agencies but we show agencies a path to save money, serve more clients, or produce better outcomes. And, as we say, there is always room for improvement…

It would be very difficult for us to produce a reliable grade because the performance of an organization is dependent upon too many variables, external and internal. Economic conditions can affect the costs of goods and services, or the workload in an employment department. Demographic changes, federal rule changes, weather conditions, and even availability of street drugs are just some of the factors that can make government agency outcomes better or worse. These agencies also face internal variables such as turnover in managers or staff, computer system efficacy, agility to change, and sufficiency of resources.

The professor writes about many of these challenges, so perhaps he is taking a second look at his first impressions of performance auditing. Some activities are subject to control, such as financial rules, while others can only be ‘managed’ within circumstances.

Here is a sampling of some of the more recent newsletters, and there are many others worth reading as well.

May 2015: Policy Design & Operational Capacity

November 2014: Avoiding the KPI Quagmire

October 2014: What Performance Mgmt Is and Is Not

August 2014: Designing a Test Worth Teaching To

July 2014: Be Both a Hedgehog and a Fox

June 2014: What Is Really Going On? [ II ]

November 2013: Measurement, Mgmt, & Leadership

October 2103: Punishing the Efficient

Gary Blackmer OAD Director

Gary Blackmer
OAD Director

 

Header Image: @Stephen Orsillo, Dreamstime Stock Photos

 

Accountability and Media Auditors at Work Featured

How do we find great auditors?

The Oregon Audits Division is holding a ‘Meet the Agency’ event for people interested in a job as a financial or performance auditor.  Come join us Friday, October 30, 2015 from 11:30 – 2:30 at the Oregon State Capitol, Room 50 to speak with our staff and learn what we do. To see the event flier, click here. Watch the Secretary of State jobs page for the chance to apply.

Every fall we initiate our hiring efforts. Auditing is a profession that is often misunderstood, but has many features that, once discovered, can offer a very fulfilling career.

We start by announcing on our website that we will be holding a ‘Meet the Agency’ session, usually late October. Meet the Agency is a chance for us to show off our office, and to speak to potential applicants about what we do, and who we are. We describe our activities in financial, performance, and information technology auditing. We also provide an opportunity for applicants to sit down with our auditors and ask questions. We want them to have a clear understanding of the role, responsibilities, and satisfactions of becoming an auditor.

mtaOur application is posted on the Secretary of State’s website and is conducted online. We ask for education and employment history and usually ask a couple questions to get a more detailed sense of the applicant. We require applicants to submit their college transcripts as well.

Applicants who meet the minimum qualifications get their written application reviewed for a possible interview. We schedule an interview with the top-ranked applicants then make a decision on hiring.

From the close of the announcements to a hiring decision is generally about 6 to 8 weeks. New hires must also successfully pass a criminal background check.

We consider our hiring decisions the most important ones we make. New hires should also know that we conduct several evaluations during their trial service period to give them feedback on their learning and progress to be an auditor. We take this period very seriously because we sometimes have to make the difficult decision to dismiss those who struggle with the work.

We look for certain characteristics of success in all our applicants, and special kinds of skills and expertise for our financial, performance, and information technology auditors. All our auditors need good interpersonal skills because so much of our work depends upon engaging and interviewing agency personnel. We look for candidates with a nature to ask questions and get answers. We must also be quick to learn the wide range of the activities performed by more than 40,000 other state employees 150 agencies, boards, commissions, and departments. Lastly, our auditors need to communicate what they find, so clear and concise writing is a fundamental skill.

Fin wallFor our financial auditors we require a strong accounting background, of course. But auditing is different than accounting and we either hire or develop a ‘reviewer’ perspective in these auditors. We expect them to apply their judgment in determining whether agencies have carried out their financial work properly.

IT wallOur information technology auditors should have a good grounding in computer systems and some accounting skills can be a bonus, since we are often testing the reliability of financial data in major state applications. We are also looking for applicants with an interest in learning about computer systems and checking them for security vulnerabilities.

We want our performance auditors to be comfortable with numbers, and also have an ability to see the ‘big picture’ and connect it to the critical details. Applicants should bring an understanding of organizations and management principles which can reveal the sources of many of our audit findings.

We have high expectations of our auditor applicants but that also brings them a deep satisfaction when they earn a place in the Secretary of State’s office. Once here, they find a rich variety of experiences that offer long-term personal growth, teamwork with peers and managers that break big challenges down into answers and solutions. That means a fulfilling career serving Oregonians by improving government and holding it accountable.

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The Roots of Performance Auditing in the Northwest

Jewel Lansing

Jewel Lansing

Oregon has many good local auditors who don’t limit the scope of their work to financial matters. They also produce performance audits that trigger improvements in their government’s programs. The genealogy of performance auditing in Oregon traces back to Jewel Lansing, the elected Multnomah County Auditor from 1975 to 1982.

The story I heard from Jewel is that the Multnomah County elected chair, Don Clark, approached her, hoping to get a professional candidate to run for the elected auditor position against the incumbent. Jewel was a CPA, and former teacher, engaged in local issues and civic matters. She agreed to run and defeated her opponent.

Early in that campaign she agreed to pick up a guest speaker at the airport for a CPA training conference. The speaker was Lennis Knighton, a professor at Brigham Young University, who had written a paper defining a type of accountability that is now known as performance auditing. During the drive she decided to adopt it as part of her campaign platform.

This wasn’t the first performance auditing in the nation however. Up in King County, their legislative auditor, Rol Malan, had received support and federal funding to explore performance auditing at the local level. In this case the funding source was the GAO (now the Government Accountability Office, originally the General Accounting Office).

After two terms as Multnomah County Auditor, Jewel ran and was elected Portland City Auditor. There, against considerable resistance from the mayor and several city commissioners, she introduced performance auditing in 1984. I was fortunate to be one of her hires in 1985. Jewel chose not to run again and left office in 1986.

In 1990 Jewel came back through the City offices one day and suggested that I consider running for Multnomah County Auditor. The value of that office had declined because there had been no requirements that a candidate needed to be a professional auditor or accountant. I made the leap and she agreed to be my campaign chair. I was elected and served two terms, then ran for City Auditor and served for two terms and part of a third, following in Jewel’s footsteps.

Jewel had also planted seeds for two other local performance audit functions, in Washington County, and at Metro the regional government. Alan Percell, Jewel’s deputy auditor in Multnomah County, was approached and agreed to start a similar function in Washington County. In 1990 the Metro government was conducting a charter review and several local government auditors at Jewel’s encouragement testified that the regional government needed an independent elected auditor, which was added and approved by the voters.

The impact of Jewel’s efforts and the attention of her audits didn’t stop at the local level. Norma Paulus, a contemporary of Jewel’s and the Oregon Secretary of State from 1977 to 1985, first promoted performance auditing by her division. The next secretary, Barbara Roberts, expanded on the idea and the efforts, as did Phil Keisling, her successor.

After I left City Hall in 2009 Secretary of State Kate Brown asked me to lead her Audits Division. It was an honor and challenge to bring what I had learned in nearly 25 years of auditing to the state level. One of our principal auditors, Shanda Miller, was recently appointed the Lane County Auditor, and I like to think that some of Jewel’s legacy rubbed off during my nearly six years together here with Shanda.

And whenever prospective candidates for local elected offices contacted me, I made sure to send them to Jewel who still remains active, writing histories of Portland and Multnomah County. I know that auditors Suzanne Flynn, LaVonne Griffin-Valade, Steve March, Mary Hull Caballero, and Brian Evans have all met with her to talk about their aspirations.

Oregon’s important government accountability has been strongly influenced by the work and contributions of Jewel Lansing. I ran across an article she wrote in 1977 about her early experience in auditing, which you can see below. The observations are still very current.

All of this important government accountability has become a public expectation in Oregon, and in the Northwest for over 40 years. Much of it resulted from the contributions of Jewel Lansing.

Jewel1

Jewel2

Gary Blackmer Director, Oregon Audits Division

Gary Blackmer
Director, Oregon Audits Division

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