Auditing reimagined: Looking beyond the public dollar

Having dedicated most of my public service career to elevating the profession of performance auditing, I was gratified to see recently that it had progressed from a nice idea to a top priority for the current generation of local government auditors.

This focus on “auditing for impact” is a healthy progression toward a more inclusive and results-oriented approach, promoted by an activist brand of practitioners who, in the words of one scholar of the field, “regard the public as their ‘ultimate client.’”

It’s a positive change that has been cultivated, in part, by the Association of Local Government Auditors, or ALGA. And I saw it on display in Seattle last month at the group’s annual conference, especially on the all-female panel I moderated featuring leading auditors from diverse backgrounds, a metamorphosis that is clearly invigorating the profession.

As this year’s conference made clear, there’s a growing realization among today’s auditors that audits can and should be used to improve community outcomes by ensuring that governments operate efficiently, effectively and equitably. And local government leaders who seek the public’s trust can look to their auditors as key allies.

Why We Need Auditing for Impact

To understand the embrace of auditing for impact among the auditing community, it’s important to recognize, as I have written before, that it is a crucial tool for strengthening democracy.

The costs of services, the way services are delivered and the powers of coercion exercised by government agencies are experienced differently by different communities within a city and require a watchful eye—a function best served by auditors.

Whereas traditional audits seek to ascertain whether the financial reports of a government agency or program are free of material misstatement and that the money has been spent lawfully, performance auditors are concerned with the larger question of program outcomes. This proactive, holistic approach often uncovers social and policy inequities.

As governments focus on policy initiatives and modern tools to better meet residents’ needs, they tend to neglect the institutional dimension—the inequities baked into governance structures or implementation mechanisms. Auditing serves as an institutional bulwark for the fair exercise of power, efficiency and effectiveness. The policy leaders who see their auditors’ work as complementary to their own will do a better job of moving the needle on equity, accountability and restoring the public’s trust.

A Heavier Emphasis on Equity

The focus on auditing for impact reflects a growing trend toward diversity and inclusivity among the auditing community itself.

Take King County, Washington. Auditors there found several equity red flags in recent audits, according to panelist Brooke Leary, audit director for the King County Auditor's Office. Auditors uncovered more-lenient treatment for white defendants represented by public defenders; white individuals more frequently receiving domestic personal protection orders compared to Black and Native American petitioners; and transit fare-evasion citations disproportionately impacting unhoused individuals or those experiencing housing instability.

A Broader Scope

As more local government auditors audit for impact, they are also taking a more holistic, government-wide approach.

After San Diego began enforcing new brushfire hazard-mitigation rules on private properties, for instance, brushfires continued to increase until a performance audit revealed that the city was neglecting mitigation on its own property. This finding—a lack of coordination and integration across siloed government organizations—resulted from a bigger scope.

As a trend, this type of cross-cutting audit indicates a growing willingness of auditors to take on big issues that require an increased capacity and analytical sophistication. For local government leaders seeking to streamline operations or design more integrated services or approaches, audit findings like these, coming from an observer working from outside of the governmental chain of command, can increase organizational learning and bring increased competence and, ultimately, improve residents’ confidence in their government.

Getting the Word Out

Even the most robust audits and important findings will have limited impact if the message goes unheard. The new generation of local auditors includes people who are unafraid to make a splash. In presenting their work, auditors are taking advantage of modern tools and technologies to synthesize and visualize the information and make a compelling case about their findings.

Getting the word out also involves reaching out to those who administer programs and those who use them. New methodologies of data collection, for example, include more qualitative approaches such as worker and end-user interviews and surveys that seek insights into how a service or program impacts them.

Audits involving New York City’s Housing Authority are a great example of leveraging user surveys. “Auditors worked with residents with distinct needs, to help drive engagement and change and determine which changes will be most impactful,” said Maura Hayes-Chaffee, the city’s deputy comptroller for audits, at the conference. “The resulting audits use more fine-tuned criteria, stemming from residents’ feedback, to better measure delivery and impact of services.”

Allies for Good Governance

What I took away from this year’s ALGA conference is that the future of performance auditing is bright and that a new generation of auditors is opening doors for improved engagement with both government and the public.
The auditor’s office is independent (although there are threats to that independence), but auditors are also allies for both the community and government representatives. They provide an objective, evidence-based perspective that shines a light on what can be improved. While taxpayers consistently express support for the important oversight role auditors play, it is important that city managers, department heads and elected officials look at auditors as a friend rather than adversary.

Oversight of government operations is fundamental to organizational learning and capacity-building, and it is as important a legislative function as passing laws. America's confidence in institutions has been on the decline, and auditing for impact offers a vital antidote.

Mark Funkhouser, president of Funkhouser & Associates, is a municipal finance expert who has spent decades in government service and is a former mayor of Kansas City. He is an advisor to Route Fifty.