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A Note About Auditing Government Agencies

The Houston City Council just voted to audit the Houston pension system.

Audit of pension systems will cost Houston $395,000

The city’s annual general fund pension bill is expected to grow by more than $100 million in the next four years – more than it currently spends on municipal courts and garbage collection combined. Mayor Annise Parker and a council-appointed task force that studied city finances last year regard runaway growth of pension bills as a threat to the city’s financial health. A recent presentation by the city’s chief pension executive concluded that the average 25-year employee who retired last year now gets a pension that exceeds his or her salary.

This is mostly good news, but it raises an important issue in auditing government agencies. First, it is time for all reformers to simply laugh in the face of anyone silly enough to bring up the “high cost” of auditing. Such excuses are absurd. Ask the City of Dixon how much it cost to NOT AUDIT their Comptroller.

The cost of NOT AUDITING Dixon? Over $30 million. Only an idiot or a crook brings up the “cost” of auditing as an excuse to not audit.

Second, audits need teeth. Heads should roll. People need demotions or firing. Any fraud, even if in small amounts, should result in prosecution.

For example, here in Illinois, we have numerous examples of audits exposing some absurdity – such as the state not knowing how many state programs there are – with absolutely no accountability for the government officials who preside over this absurdity.

Any and all audit legislation should include sanctions and punishment for any discovered fraud or wrong-doing. It should also lay out some level of accountability for poor performance in advance.

Too often, audits find all sorts of problems, but no one pays a price. Robert Holland’s office does a passable job of finding problems. However, given the fact that this is Illinois, no one pays a price. Instead, they retire early, collect an unwarranted pension, and get a consulting gig from one of Illinois 1000s of needless government entities.

Make audits hurt, or don’t do them. That is why Illinois needs at least a decade worth of aggressive forensic audits. We also have the tax bills to prove that not doing the audits is more expensive than doing them.

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1 Response to "A Note About Auditing Government Agencies"

  1. Comment by John Kraft on August 4, 2012 at 9:38 am said:

    I can’t agree more, especially at the local level. Even when evidence is brought their attention, it is swept under the rug. I’m guessing the standard in Illinois is to deny the problem, sweep it under the rug hoping no one will notice, then attack the messenger.

    The other problem I see is the ability of local governments to dictate to the auditor what they are “allowed” to look at and threaten to not pay the invoice if they look at things not listed in their dictated “scope”. When allegations and proof are brought to the auditor’s attention, they don’t follow thru, but instead put a disclaimer on the completed audit that will relieve them of any responsibility.

    It’s shamefull and must be fixed.