Tuesday, February 28, 2012

More About That KPMG Audit

A word of thanks to the Richardson City Council audit committee (Bob Townsend, Laura Maczka, Scott Dunn) for asking the city's auditor, KPMG, if their Comprehensive Annual Financial Report (CAFR) could be published in spreadsheet format. KPMG insists that it not be, in an effort to make it harder for unscrupulous people to change the data. Of course, that also makes it harder to audit the auditors, so to speak. KPMG have allowed the report to be published in a searchable PDF format. I can attest that this year's CAFR is searchable (thanks).

After the jump, so what?

I think the audit committee is giving up too easily on this point. KPMG is providing a service to the city. Richardson could insist on a spreadsheet deliverable the next time KPMG is hired to do the audit. Even if KPMG (and all auditing firms Richardson could use instead) refuse to budge on this point, there is still an alternative. The report published by KPMG might come with conditions attached, but the data in the report is supplied by the City of Richardson. Richardson could publish its own spreadsheets of the data it supplied to KPMG for KPMG to conduct an audit in the first place.

Kudos to Amir Omar for inquiring about the difference between internal and external audits and to the audit committee for suggesting that they may institute quarterly reviews of the internal audits conducted by city staff. The city council's job doesn't end with hiring great people for the city staff. As Ronald Reagan famously said, "Trust, but verify." Insist that the data prepared for those quarterly reviews of internal audits be openly published in spreadsheet format to make the verification task easier for all.

Oh, and one more thing. What's with an audit committee in the first place? Shouldn't staying on top of the city's financial position be a primary responsibility of all council members? Why would the full council delegate that to a committee of three? Why wouldn't the full council attend all meetings with the auditors? Coincidentally, three is the largest number of members a committee of council members can be without constituting a quorum of the council as a whole, which would trigger the Texas Open Meetings Act (TOMA). That should not matter. Audit committee meetings should be announced and open to the public in any case. If the audit committee does institute quarterly internal audit reviews, they should conduct these meetings in an open and transparent manner.


Anonymous said...

Actually with three folks you still have open meetings act issues.

From the Texas open meetings act page:

Under some circumstances, less than a quorum of a governmental body may be subject to the Open Meetings Act.

See Esperanza Peace and Justice Center v. City of San Antonio, 316 F. Supp.2d 433 (W.D. Tex. 2001) ("walking quorum").

See Willmann v. City of San Antonio, 123 S.W.3d 469 (Tex. App.-San Antonio 2003, pet. denied) (subcommittee of city council).

Nathan Morgan said...

Let us not, once again, ignore the Richardson City Charter, wherein the mandate for all committee meetings be open and properly noticed to the public.

What? Did our loyal leaders sneak around and quietly hold these meetings without fan-fair...again?

Mark Steger said...

I found on the city's website this public notice of the audit committee meeting. So, if the audit committee begins to meet quarterly, I assume the meetings will be public and announced.

There's room for improvement here. I found the notice by doing a full site search. The website should do a better job of identifying the council committees and including their schedules on the regular council calendar.

John Murphy said...

Audit committee meetings are open meetings and are posted. They have been posted and open for many years. Citizens wanting a better understanding of the audit function have attended on several occasions.

The audit committee was established by the council to take a lead in reviewing the technical nature of the audit( deficiencies, GASB changes, policy compliance, etc.)and reporting back to the whole council for action, the same as other council committees do. All members of councils I have known were very engaged in the audit process and subsequent discussions since the audit is a key indicator of how well the books and records of the city were managed during the audit period.

Mark Steger said...

John Murphy, thanks for the confirmation that audit committee meetings are posted and open. Maybe I just missed the online notice. I never did find it (except in the document archives through the site search function) or any information about what other council committees exist and when they might meet. Maybe if we can advertise them more prominently, we can boost the audience ratings for those meetings, too. Oh joy!

Nathan Morgan said...

It is true, they do post notice. Just like the other meetings when they don't want anybody around to observe, very quietly. They certainly don't go out of their way to let the public know.

Now, if we can only keep them honest about spending the public resources in the manner they were intended.

dc-tm said...

Each week Richardson staff emails out the "Week in Review" newsletter and it is posted on-line as well. One suggestion I would make is that a notice or section in the "Week in Review" be made for all upcoming meetings of all boards and commissions for the next two week period. Currently, not having that information in the newsletter is a missed opportunity for more civic involvement. I too have never noticed the audit committee meeting postings, but also I have never specifically looked for them either. Possible good solution and step forward?