Monday, February 20, 2006

Auditing the Auditors?

Auditing the Auditors?

Recently, the City of St. Louis Budget Director issued two Requests for Proposals (RFPs) for auditing services.
  1. St. Louis Public Schools audit RFP
  2. City of St. Louis audit RFP

Remarkably, the two RFPs are virtually identical. Both RFPs are for auditing of each entity for three fiscal years, beginning with the current fiscal year (thus, FYs 2006, 2007, and 2008).

But most interesting is that the selection and maintenance of these contracts are "subject to satisfactory performance and at the sole discretion of the Mayor" (emphasis added).

Very interesting.

So the question is: just what do they expect to find? And, further, will the results of these audits be promulgated to the public?

After all, they seem to be quite parallel to the annual Comprehensive Annual Financial Reports (CAFR) issued by the Comptroller's Office and a similar CAFR issued by the SLPS.

Will these audits be financed by the Mayor's Office? If so, isn't this a major stepping on the toes of the fiscal due diligence duties of the Comptroller, the Board of Estimate and Apportionment (E&A), and the Board of Education?

Recall that the Budget Director reports to all three member of E&A - the Mayor, the Comptroller, and the President of the Board of Aldermen. So, wouldn't E&A have to approve these contracts eventually?

I think independent audits of both SLPS and the City might be smart - but I would want them to be an operational audits rather than fiscal audits. Finding problems with money management is fine and dandy, but the real issues are about how well the school district and city government are being managed on a day-to-day basis. Sure, CityView covers some of that, but its resources are pretty limited.

But of course that's exactly the point. An in-depth operational audit would cost a lot more than just reviewing the books. And even a fiscal audit is itself a pretty complex undertaking.

So, the idea of an independent audit is a good one; I'm just not so sure about the way it's being bid.

3 comments:

PonyMommy said...

St. Louis City Charter, Article VII, Section 1. Mayor ...He shall annually appoint a certified public accountant to thoroughly audit all books, accounts and records relating to the fiscal affairs of the city and report the result to him. A copy of said report shall be filed with the register.

Anonymous said...

It's a Charter requirement.

Anonymous said...

The audit contract you refer to produces the city's CAFR. It is indeed a charter requirement and, of course, good government accounting practice.

The FY 05 CAFR is posted on the city's Web site. Check it out.