The decision of whether the City of Lawrence will keep an auditor on staff likely won’t come easily.
The City Commission has said it will discuss whether the city auditor should be eliminated at its meeting next week, and most commissioners said they are still undecided.
Vice Mayor Stuart Boley, himself a retired auditor, said he is supporting the recommendation to cut the position. The possibility of eliminating the auditor has drawn some public criticism, but Boley said he thinks a lot of those arguments have been theoretical.
“The proponents of keeping the auditor will probably need to provide a practical justification for that decision,” Boley said.
Can we live without it?
City Manager Tom Markus released his recommended budget May 4, which proposes eliminating 11 positions, including the city auditor. Markus recommended eliminating that position as part of the 2017 budget, but commissioners ultimately agreed to keep it.
The auditor is a performance auditor, as opposed to a financial one, and evaluates city programs. Markus told commissioners at their most recent meeting that there are alternatives to the current method, such as hiring an outside audit.
“To me, the advantage of that is you hire somebody that has the specific acumen to address an issue in greater detail immediately,” Markus said. “I’m not afraid of audits; I thinks there’s real value.”
Last month, the city hired an auditor to investigate concerns that the city’s accounts receivables department has not properly been sending out thousands of dollars worth of invoices for several years. Markus said that audit is one example and also noted that nationally, it’s uncommon for local governments to keep a performance auditor on staff.
“So, I start there,” Markus said. “Can we live without it? My belief is we can.”
Structure of the position
Currently, the auditor falls under the direction of the City Commission.
City Commissioner Matthew Herbert said that he’s undecided on the choice, but that if the position is kept, the way it operates must change. Herbert said that because the commission works part time, the auditor lacks supervision.
“You have a City Commission that largely is not at City Hall from 8 to 5, Monday through Friday,” Herbert said. “So you have a city auditor that supposedly is reporting to people that very rarely are in the building. It’s my opinion that the current position has essentially no supervision.”
The auditor brings performance reports to the commission with recommendations for improvement. Over the years, the auditor has found several issues, including missing payments. The auditor, Michael Eglinski said he thinks the position could be improved by creating an audit committee.
Eglinski said a committee would provide oversight of the audit as well as follow-up, advice and evaluation. He said he thinks it would enhance the independence and effectiveness of audits.
“It brings more time to be available for the conversation about the audit,” Eglinski said. “Right now they’re going to the commission typically 10:30 at night, at the end of a long meeting. And they’re not going to spend an hour and half talking about issues related to an audit and asking questions.”
The recommended budget includes a 1.25 mill levy increase, and commissioners have already agreed they don’t want to go above that. That means that keeping the auditor position — which will cost the city $130,000 in 2018 — will require reductions elsewhere.
Herbert said he agrees an audit committee could address the issues with the structure of the position, but that the commission needs to face the reality that if the position is kept it will mean cuts elsewhere. Herbert also said having the auditor on staff while also hiring outside financial auditors is essentially “paying twice.”
“Anytime we want specific information from a source that has expertise in that arena, we’re going out and hiring it,” Herbert said. “To me, in terms of being smart with city finances we really ought to start doing one or the other.”
Pay for an independent viewpoint
Of the 11 positions Markus is proposing to eliminate, the city auditor position is the only one that is filled. The position was created by a city ordinance, and designed to be under the direction of the commission.
Eglinski said that he thinks the decision regarding the position should be made separately from a budget conversation. He said the purpose of the position is to have an auditor independent from city staff.
“I think that there are different products,” Eglinski said. “A report that the finance department hires a CPA to look at is different than a report that the governing body directs their auditor to look at.”
But Boley said he doesn’t think that eliminating the auditor will create any gap in oversight. Boley also noted the city has hired outside auditing firms, and that it also contracts with a firm to do an annual financial audit.
“This perception that if we don’t have a performance auditor we won’t have any financial accountability and there will be no check on the city manager, I think, is fallacious,” Boley said.
Waiting to hear more
Commissioner Lisa Larsen, who is also undecided, said she has some questions about the need for conducting multiple kinds of audits. She said she wants to make sure all audits are truly independent.
“I want to look at how we’re doing all of our audits right now,” Larsen said. “Where is the need at and what’s going to be more efficient and effective for us to get the best we can get?”
Larsen also said she wants to hear what city staff and the public has to say on the topic.
“I’m not ready to make the decision on it until I hear more and get some more answers and fully understand the potential ramifications,” Larsen said.
Both Commissioner Mike Amyx and Mayor Leslie Soden indicated they don’t have much to say ahead of Tuesday. Soden said she is looking forward to the discussion, but said she couldn’t say which way she is leaning at this point.
“I think it’d be really good to have the auditor there and all five commissioners discussing the issue,” Soden said.
The City Commission will convene at 5:45 p.m. Tuesday at City Hall, 6 E. Sixth St.