Monday, October 31, 2011

IT Risk Assessment

Our annual audit play includes specialized information technology audits. The city spends millions of dollars on computers, systems and technologies. To help with performance audits of departments done by our office, we have a technology audit team that help us determine the IT risks to the city. Risk Assessment sets up the inventory of critical IT systems. The inventory is made up of 4 main IT audit categories: IT business processes, business applications, (either existing or under development), IT infrastructure, and IT facilities.

IT audit categories are risk-related using an analysis based on objective technical process maturity score and a judgement based qualitative score. The IT risk assessment methodology is aligned with professional guidance, such as the Institute of Internal Auditors Global Technology Audit Guide on Developing the IT Audit Plan."

As Auditor I would not be doing my job well if our office did not focus on generally accepted IT governance and controls framework. In the age of sabotage and terrorists, we must continue to pay attention to these important IT risks. Check our audit plan on the Auditor's website to read the full details of this important area.

Friday, October 28, 2011

older Americans

Older Americans are falling into poverty in shameful and staggering numbers. I heard one older gentleman at a coffee shop in North Denver exclaim last Friday that he wished he could go down and join in on the "tent city." He was afraid his walker might get in the way.

One out of every six elderly Americans, now lives below the poverty level. Between 1991 and 2007 the number of American between the ages of 65 and 74 that filed for bankruptcy rose by 178%. The sad truth is that our state and local governments are broke. They realize there is no way they can keep the promises the made to those retired folks. Some politicians are planning on telling older people in Colorado that they will bring back the senior citizen property tax relief payments.

I told a friend of mine in the legislature, it is unethical to promise to bring that tax benefit for older people back without a funding source for those payments. Does anyone remember the severance tax. I think Governor Hickenlooper is for it. That would be a temporary source for funding for senior property tax relief. Our conservative state to the north of us has used severance tax to fund students to free higher education for decades.

Thursday, October 27, 2011

A Reflection on Republican Primary Candidates

As I have told many of you, every month I attend the Colorado Republican Business Coalition. At my table someone asked how I felt being a Democrat and coming to a Republican meeting? I told them I was learning lots and people were very friendly, but I reminded them I had not had as much time as I had to make as many enemies in my own party. Every now and again they say they want to discuss strategy.... and look at me. I tell them: "If I told the Democrats your strategy, they would not know what to do with it." And that last comment comes after years of experience.

A Regis student today in the library asked why Herman Cain was ahead in the polls surrounding the Republican Primary candidates. In my view, Cain is a bit of a populist. And he is against the establishment of the Republican leadership. So grass roots Republicans are giving him their support. The same pattern holds true for the Democrats. Democrats in Colorado and Denver do not like their leadership telling the rank and file for whom they have to vote. Recall the Republican and Governor candidates last time round.

Perry has asked everyone to look what he did in Texas. Let's take a minute to look at it.

1. Texas has the highest rate of poverty in the nation.
2. Texas has the lowest educational performance in the nation, almost down with Mississippi.
3. Texas is the largest polluter per capita in the nation.

I enjoyed venturing into the national sphere. I wonder if I should think about raising my profile in this area. I think I'm doing fine right here at home.

Wednesday, October 26, 2011


A sad bit of news from last month's headlines: The Census Bureau's annual poverty report, released last September announced that 46.2 million Americans, or one in seven of us, were poor in 2010. The prolonged recession, with high levels of unemployment, has swollen the ranks of the poor. The Bureau reported that the poverty rate in 2010 reached the second highest since back in 1965.
The numbers of Americans without health insurance stood at record highs.

And recently, I am sure all of you saw the Denver Post Supplement of Delinquent Taxes. Thousands and thousands have not paid or only paid their property taxes partially. I'll wager it weighs a quarter pound in paper pulp. It's going to take me a while to tally how many folks actually make up this list of taxpayers in delinquency. I will let you know later.

These folks were not camped out in Civic Center. They are struggling to keep a home over their heads and food on the table for the kids. These camp-ins, which should have included teach-ins on the economy, remind me of the effects of Gutenberg stumbling on moveable type, though the Chinese had invented the process centuries earlier. When he started printing hundreds of copies of the bible, little did he know he was helping bring on the Reformation. Folks could take their own copy of scripture, formerly chained to the reading desks in the chapels and monastic libraries into their own reading room away from the influence of clergy.

We are not sure what citizens are signaling with these camp-ins, we will have to wait and see if they really get organized. "Don't mourn for me, organize," spoken by Joe Hill, labor organizer, about to be shot in Utah. He later asked that his ashes be mailed to place out of Utah. He said he did not want to be caught dead in Utah.

Tuesday, October 25, 2011

Occupy Denver

Listening to radio and TV interviews of tent colonists down at civic center here in Denver made it clear. Some of the folks were not sure what to be upset about.

Let me provide a guide to anyone who is perplexed about that is going wrong with the good old USA. The tent people were not clear as to why they were upset. The sure know something is not right.

Someone asked me what is the message of the Occupy Denver. We won't know for a while, just like it took humanity a long time to realize the revolution Gutenberg brought on with his bringing moveable type for printing bibles. Reformation anyone?

Back to my list of possible focus of anger.

1. 1% of Americans own 90% of the wealth in the country. Get your attention.

2. Medium disposable income for all Americans has gone down and not gone up in recent years.

3. You are worse off than we were 15 years ago. Starting to boil?

4. We have a 9.1 % national unemployment rate.

5. 16% of Americans are working part time and wish they could work full time to provide for their families.

6. 21% of the unemployed, underemployed as the economists call these people, have given up looking for jobs. That's almost 1 of 5 Americans.

7. 32 % of African Americans fall in the underemployed category. Starting to simmer?

8. Police, firefighters, teachers pay higher taxes than the average hedge fund operator.

9. General Electric made 4 billion dollars in profit last year and paid not one penny in federal taxes.

10. Things are getting so bad for some of the smart rich folks, Warren Buffet and Bill Clinton, are now saying they don't need the tax breaks Congress has been giving them. They want to pay more in taxes. And the last time I gave money to our Denver Treasury, it is tax deductible. The city is like a charity.

Anyone want to recite the old line from the Psalm: "To your tents, Oh, Israel."

2A is OK

Referred Ballot Question 2A, sent to the voters by the Denver Auditor's Office with the gracious help of Denver City Council is OK. Please vote yes. The measure allows the auditor to appoint an employee of the auditor's office to sign city contracts in the auditor's absence.

If I go out of town, the contracting process for the city comes to a standstill because the city charter does not give the auditor authority to appoint a signatory employee. A "yes" to this ballot measure will enable me to do this with the same accountability but with more flexibility and no additional cost.

Tell your friends. "It's Ok to vote for 2A." I feel a song coming on.

Monday, October 17, 2011

Audit Universe vs Audit Horizon

"Oh, beautiful, for spacious skies, for amber waves of grain, for purple mountains majesty, above the fruited plain...." We here in Colorado know what a great horizon is. The Denver Auditor's Office also has a great horizon. We call it our "audit horizon" of planned high-risk audits which stretch over three years. That's a horizon that serves the taxpayers of our city. I am really proud of our Internal Audit Division for the outstanding, meaningful and valuable audits they have performed over the past years.

In the past our Internal Audit Division developed what was called an "audit universe." The process was cumbersome and time consuming offering analysis that revealed there are thousands of possible audits that would require tens of thousands of audit hours. The areas of possible audit were even assigned a percentage ranking in the list of all possible audits to be done. What this complicated process really communicated was that it is not possible to audit each and every city agency, activity and contract. But by telling the administration and council of audits in a universal list, we inadvertently gave the impression that areas to be audited would be audited. It might take years, but they were on the list. That approach bothered my conscience. So, with the hard work of our Internal Audit teams, we have changed.

So now the "audit universe" has taken second fiddle to what we call the 'audit horizon," as mentioned above. With common sense and realistic expectations the audit horizon approach identifies, prioritizes and manages audits determined to be critical to the city operations. Audits included in the horizon are based on available audit hours each year to ensure that realistic expectations are established and stated goals are met. The auditors build in ample hours to a plan for specially requested audits by departments, the mayor and council. The audit horizon approach gives me "lots of flexibility to be able to respond to emerging issues in a timely manner by providing high quality and responsive customer service to elected officials and operational management." That last comment is right out of our audit plan. You can read it on our web site:

We give great care in selecting the audits to be performed. We want to make sure that there is widespread audit coverage in terms of both types of audits performed, as defined in generally accepted government audit standards promulgated by the Comptroller General of the United States. A copy of the "yellow book," as it has been christened by auditors can be read on the web site of the United States Government Accountability Office, in a publication entitled: "Government Auditing Standards," and was revised last in July of 2007. By city charter our office is required to back up all our audits with the rules in the "yellow books. If we don't perform to those high standards, we will get dinged by our peer reviewers who review our work in the Denver Office every few years. I am please to report we received rave review from our last peer review by outside auditors from other jurisdictions around the country.

Friday, October 7, 2011

Who audits the Auditor?

At neighborhood meetings, citizens - skeptical and mistrustful of all government operations, even the auditor's office - have often asked me, "Who audits you, Gallagher?"

This question poses and interesting matter for citizens who want to make sure that their elected auditor is performing truly independent audits and fighting for the best interests of the taxpayers of our city.

Government auditing standards dictate that audit agencies, including our office, shall have a "peer review" of our audit work every three years. In October of 2009, the Audit Services Division of our Denver auditor's office went through an external peer review of its work. The peer review team was made up of three audit professionals, three accomplished audit managers representing local government audit functions from around our country. The peer review team is selected by the Association of Local Government Auditors. We have no say on whom we get to audit our office. The team stays with us for about a week and examines all our audits and all our processes. That's how they make sure our office is in compliance with the highest possible level of compliance of Association of Local Government Auditing Standards promulgated by the Comptroller General of the United States. The peer review team members are always from out of state, so it does not even look like we have a conflict of interest by bringing in friendly auditors whom we know. In Denver our auditor's office staff wants to be held to the highest ethical and professional standards.

I am proud to report to you that the peer review audit team found the Audit Division in our Denver Auditor's Office excels in many core audit tenants and processes. The team liked that our office fostered an excellent system of internal controls necessary for compliance with professional standards. The peer reviewers determined that our performance audits added significant value to city operations. The review team identified several best practices used by the Division. These practices were a result of the restructuring of our Auditor's office due to an amendment to our city charter. The outside peer auditors congratulated our office on gaining true structural and legal independence. They noted especially the audit planning techniques used to formulate our annual audit plan. The peer reviewers commented on our use of formal risk assessment tools and project planning and budgeting processes. They noted the high quality and expansive reporting practices used by the Division. The peer reviewers agreed with our progressive management and supervisory techniques especially our decision to move to all electronic working papers. This means we save thousands of trees since this change was implemented. Who says an auditor can't be green? Our peer reviewers even said they saw techniques from our Denver Model which they wanted to take back to their home offices.

I wish to congratulate and thank our Internal Audit Division for the great work they have done to merit such outstanding praise.

Our next peer review team will visit us in 2012 for our next review. We look forward to their auditing the auditor.

Wednesday, October 5, 2011

it's in the air

I told you about attending the mini conference sponsored by IBM corporation at which a analytic expert mentioned the use of social media, emails and texts by rioters in England during Britain's recent unrest. Rioters texted each other, not for social intercourse, but as to which locations should be targeted for criminal looting and burning. It's just something in the air, you say. The rioters have a new weapon, instant communication as to where to pillage, and where the police are.

Now, Republican presidential hopeful, Ron Paul, voiced his concern that the United States could see social unrest like that experienced in England. Conservative Representative Paul is hardly an alarmist. Must be something in the air, or could it be in the water?

Recently on the New York Times page one, "Protest Rise Around Globe as Faith in the Vote Wanes. Many are Driven by Contempt of Political Class." The reasons sending citizens around the world into the streets, in Spain, Greece, South Asia, Europe and even Wall Street range from corruption, lack of housing, and joblessness. In many places street protests are turning to violence. Tear gas is in the air.

Fr. Walter Ong, S. J., who once taught at Regis University, and author of many books on communication theory once reflected that all technology is for the good of humankind, as long as that technology is properly interiorized. Using electronically mediated communication to riot, pillage is not what Fr. Ong had in mind.

Tuesday, October 4, 2011

Arturo Jimenez

I am supporting the re-election of Arturo Jimenez for the Denver School Board. Arturo should be re-elected because he dares to ask the tough questions which a school board member should ask. He is not afraid to confront the administration about fiscally unsound choices and poor academic goof ups.

Arturo also fights to build consensus even with the sharp divisions on the board. His ability to work with other members of the board can be seen in his colleagues electing him to the post of vice-president of the board. He has fought for transparency and fiscal accountability on the board.

And Arturo's ability to deal with parents and students who speak Spanish at home is a valuable asset for our district. This is especially important because seventy five percent of Hispanic students drop out of North High School. As a resident of North Denver, I am proud Arturo can speak to parents and students in their own language about problems facing them and their children. He brings direct feedback to a board which greatly needs that information, not mediated by the district. His linguistic ability is the envy of all the other board members. This talent makes Arturo a unifier who brings in all to the table, especially those who struggle with language issues. He talks to everybody across cultures and generations.

The other quality of Arturo's personality that recommends him for another term is his courage. He asks the tough questions to the administration about fiscal and financial mismanagement. He is not afraid to ask what needs to be asked and aired in front of the people and the board. JFK got in trouble with the Cuban invasion because all his advisors would not share with the president their doubts and misgivings about the Cuban invasion. Result: disaster. Every board needs someone with Arturo's courage to not be afraid to be unpopular and express doubts about teachers teaching to standardized tests. Arturo is that courageous advisor in this race.

Finally, Arturo is really stubborn. I have observed him work hard and never letgo until problems are solved. He is even-tempered, has a good sense of humor, another important asset to be on our school board. He is not a grudge holder and I admire Arturo especially for that. Indeed he is an inspiration to me because I sometimes forget that important virtue. Arturo is an optimist and happy in his work on the board is blest the loving support of his wife and family. Arturo has vowed he will not run a negative campaign even though his opponent's well-funded campaign has already turned personally vindictive and divisive. Allow a rhetorical intervention, that's a shame on our neighborhood.

Monday, October 3, 2011

Audit Plan

It's fall, and it's that time of year, the season of cooler weather and yellow leaves. As Shakespeare put in in one of his most beautiful sonnets (from memory), fall is "that time of year when thou mayest in me behold, when yellow leaves or none or few do hang upon bare ruined choirs where late the sweet bird sang." In the auditor's office this is the time of year for reaching out to ask what steps we can take to fine tune our annual audit plan. Every year we seek input from various stakeholders in our city to help me and the audit staff determine which audits we should do for the coming year, 2112.

We ask the Mayor, City Council and the Clerk and Recorder to chime in their opinion as to areas where they see weak internal controls or areas of risk. Let's say 'amen' to the mayor and council for their suggestions.

We will meet with the newly appointed CFO, Cary Kennedy. As former treasurer for Colorado she understands how important performance audits can be to improve the city agencies. As sure as leaves turn bright yellow, we are reaching out to find out where we can best serve. Sing to us, Cary.

Looking ahead to 2113 we will seek input from citizens as well by holding public meetings to seek help from Denver's citizens about perceived risks to city agency performance. We will hit the four quadrants of the city. We hope citizens, city employees, and business leaders will bring forward their concerns. Experts have written many books about how good auditors should get out from behind their desks and get in the trenches with the citizens and city workers to find out and hear first hand what is going on. We want to be citizen centric, citizen friendly and citizen centered. We will put out the call and hope the citizens will provide the response.

I want to thank members of the Denver Audit Committee for their good work in serving on behalf of their appointing authorities, 2 from the mayor, 2 voted on by council, and two appointed by me who also serves as chair of the city's audit committee. Fiercely independent, the audit committee members ask the tough and necessary questions about the audit findings of various agencies. This is not about hurt feelings, this is about improving how our city runs and how agencies serve the taxpayers. The auditor and audit committee members here in Denver hold the administration, council and agencies accountable for how our city is running. We will do regular follow-up to make sure agencies are singing the same tune in response to audit recommendations.

And after all this, we hope the citizens of Denver will hear, not angry cacophony, not setups nor spiteful gotchas, but rather a collaborative chorus of audit recommendations marked by harmonic accountability and syncopated commons sense business practices. Can you hear those sonorous birds chirping on the ruined abbey walls in Shakespeare's sonnet?