The End to Pushback on Audits?

Auditors across the country have shared with me that they get pushback from agencies being audited. They get arguments full of fallacies. We get our fair share too. Let me identify a few of the fallacies for you.

We could help end the city deficit if we had a dollar for every time a city agency has said to us, "The auditor has no authority to look at that information." I call that argument from formal logic, an "ad vericundiam fallacy." That fallacy refers to arguments that ask for acceptance based not on sound fact, but appeals to some higher authority or tradition. The agency tells us, "We have always done things this way.” Like Rebtavia in "Fiddler on the Roof," the agencies shout back "Tradition." We simply respond, as did the city attorney, "Read the charter, the auditor has the authority."

One agency, responding for a request of staff work records simply dumped thousands of papers off at the auditor's office with no delineation as to which information covered the requested material. We felt like archeologists sifting through tons of historical residue to find out the truth about employment patterns. I call that the fallacy of confusion and chaos. This diversion process tries to overwhelm the audit staff.

Several agencies have complained that working with the auditor's office is not timely, "We are so busy running our agency, we can't take time to have staff get all the information you request for an audit." I call this one "the no good time fallacy," not a formal definition in classical logic, but which certainly applies to the city. With some agencies there will never be a "good" time for the auditor's office to look at agency records or speak to agency staff. "Just go away, we don't want to be bothered, no one has ever complained before," they tell our office. Like the prayer for the Tsar in "Fiddler," "Lord, may the auditor....be far away from us."

One agency head actually told our audit staff he did not see much value to performance audits. Agencies have hired expensive consultants to anticipate arguments and problems we might find in their agency. The agencies try to diminish what our office finds not working well in a department. We had another department who tried to distract us away from the real scope of the audit. We simply include the information as part of the audit.

And Denver Health, in response to our audit of Emergency Response Times, kept saying to us, "Look what a wonderful emergency room we have, the best in the nation." We told them, "we agree with you, you have a great emergency room, we are simply trying to measure how long it take for you to get injured people to it." I call that close to the fallacy of composition. Our department is composed of many areas, "so if our emergency room is so wonderful, how can any other part of our system be in need of improvement."

Agencies use ad hominem augments in response to audit findings, arguments of personal attack. "Oh, that damn Gallagher is doing this for political purposes. He must be running for mayor."

But, there is hope, I hope.

David Fine Esq., City Attorney, hand-delivered to me, an unsolicited memo which he had written and shared with Mayoral Appointees after a meeting with them on October 9th. The memo is on our website for all to see, including agency staff and heads. He reminds them of our access to records and, indirectly to staff, during our audits.

In the final paragraph, the city attorney reminded the mayor's appointees, "Please be advised that it is illegal to take adverse employment actions against employees from your department based upon their participation in these performance audits." Our audits will only bring improvement if city employees feel free to communicate to us without retaliation for their comments on department situations during a departmental audit. For this auditor any other retaliatory or bullying cultural context is intolerable and unacceptable.

Fine could not have put in any clearer. I congratulate him on a thoughtful and appropriate memo. I hope the agency appointees take it to heart. If they don't, be assured Auditor Gallagher will with vigor call them on it every time.

The Yellow Book

Have you heard of “The Yellow Book?”

The Yellow Book is the collection of Government Auditing Standards issued and updated from time to time by the Comptroller General of the United States. The 2007 Denver City Charter change, supported by the mayor, the council and me wrote into the charter language which charged the Denver Auditor’s Office to follow all standards from the Yellow Book in all audits performed. Tim O’Brien, former Colorado State Auditor and member of the City of Denver’s newly constituted independent audit committee opined that “having the Yellow Book in the Denver Charter is a very strong backup tool for any audit performed by the Denver Auditor’s Office.”

Chapter 3 of the Yellow Book covers general standards and the number one standard for all auditors, “whether government or public, must be free from personal, external, and organizational impairments to independence, and must avoid the appearance of such impairments of independence.”

Why do auditors have to fight for independence? As most Denverites know the Auditor’s Office is a nesting ground for future mayors. Many auditors have run for mayor while occupying the auditor’s chair. I am not. Now, I am not impuning that popular historic pattern of office climbing practiced by so many of my predecessors. And ambition, properly directed, is good. St. Paul says it’s good for young clerics to be ambitious seeking to be bishops. But the ambition we have to steer clear of is the extreme ambition of, let’s say, MacBeth whose ambition leapt over itself and fell on the other side.

Auditors must maintain independence “so that their opinions, findings, conclusions, judgments and recommendations” offered to management “will be impartial and viewed as impartial by objective third parties with knowledge of the relevant information.”

So an auditor running for mayor, whose ambition calls into question every action of an administration and its agency, in my view, may impair an auditor’s independence. This impairment is mentioned in the Yellow Book. It is called a “personal” impairment.

So in conclusion, in order for audit recommendations to be taken seriously, the source of the suggestions have to be free of “personal” impairments, external impairments and organizational impairments. We are sure glad we have the Yellow Book as a guide.