Councilman Nick Mosby sent out the following email with his opinions on the auditing of Baltimore. It is refreshing to have a councilman who takes the time to send a detailed email to his constituents about an important subject.
You can read the latest news about the auditing bill here.
“Focus Should Be Quality Over Quantity To Systematically Tackle Governmental Waste
The need for regular auditing of City agencies is apparent, and has been for decades. My business experience affords me firsthand knowledge of the importance of conducting solid auditing procedures. During these tough economic times, it is critically important to ensure that money entrusted to government by hardworking taxpaying families is utilized efficiently. Moreover, I believe it is essential, now more than ever, that we stand united, working together with the common goal of implementing functional auditing methods and procedures which will eliminate decades-old systems and practices that encourage and enable operational inefficiencies.
Unfortunately, the original piece of legislation that was introduced to the City Council attempted to address the dire need for auditing, but fell short in many respects. The idea of conducting performance and agency-level financial audits on over 50 City agencies on a biennial basis sounds grand and enticing, however, at best, it is impractical because it is built upon unsound methodology that would create several unintended consequences. The original legislation proposed an audit that would have swiped a broad stroke across all City agencies, departments and commissions, achieving more of a quantity-based assessment, as opposed to proposing a performance audit that would efficiently prioritize risk, and develop criteria to assess financial factors. Passing that piece of legislation would have set unattainable goals, and produced less effective and less thorough results for our citizenry.
Rather than placate emotions that are aroused by such an implausible measure, I think it is important to fully inform constituents about the auditing process. A financial audit is just that. It is a financial review of records. Currently, in the city of Baltimore, a Comprehensive Annual Financial Audit is performed on Baltimore City’s financial books. This financial audit centralizes all of Baltimore City agencies’ finances and examines the accuracy and validity of all financial transactions and activities. This form of centralized financial auditing is a common practice with other municipalities throughout the United States.
In contrast, performance audits are multi-layered assessments that examine and identify operational, structural, and systematic waste in a given department or agency. Performance audits assist in exposing areas of concern associated with cost-effectiveness and efficiencies by identifying fraud and outdated departmental practices and procedures. Unlike financial audits, where financial accounting practices are called into question, performance audits factor in finances with a more in-depth assessment of operational programming associated with specific agencies.
Baltimore needs to focus on implementing a plan to regularly administer performance audits devised from a sound and systematic approach to identify fraud and abuse, as well as to uncover operational inefficiencies and departmental ineffectiveness. To achieve this, we need to implement dynamic and comprehensive risk-analysis driven auditing procedures.
I do not agree with the current approach of manicuring the City’s Charter, however, it lays groundwork for serious discussion, and provides a needed step in creating fiscally sound municipal operations. In the coming weeks, I will introduce additional pieces of legislation that will promote effective, transparent, and practical auditing procedures.I hope that my fellow colleagues will continue to work together to develop better policies for the future of my beloved Baltimore.