Performance Audit in Washington

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Performance Audit in Washington

• How I-900 affects local governments

Puget Sound Finance Officers Association,
February 14, 2007
Jan Jutte Director of Legal and Client Affairs
WASHINGTON STATE AUDITORS OFFICE
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Overview

• Brian Sonntags vision
• Definition of performance audit
• Integration progress
• Outreach
• I-900 requirements
• Performance audit process
• Who, what, when, how
• Status report
• Questions and answers

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Brian Sonntags vision for performance audit

• Conduct independent, constructive, evidence-based
  audits that
• Improve transparency
• Identify exemplary practices
• Report what is working and identify opportunities
  for improvement
• Are valued and used as a management tool
• Promote continual improvements in quality,
  efficiency and effectiveness

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Definition of Performance Audit

• An objective and systematic assessment of the
  performance and management of an entity, program,
  activity or function in order to
• Provide information to improve performance and
  operations
• Facilitate decision-making by parties with
  responsibility to oversee or initiate corrective
  action
• Improve public accountability and transparency

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Integration of performance audits

• Work done by the Auditors Office
• Financial audits
• Federal single audits
• Accountability (state and local compliance/fiscal
  integrity) audits
• Performance audits
• Fraud investigations

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Outreach efforts

• Citizen Outreach
• Town hall meetings
• Focus groups
• Results posted on Web site
• Telephone surveys
• Survey posted on Web site
• Entity Outreach
• Interviews
• Surveys

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Outreach efforts

• Six top performance audit priorities for citizens
  (not in order)
• Public schools
• Health care
• Transportation
• Social services
• Public safety
• Environment

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What we have learned from citizens

• Outreach results revealed
• Performance audit is not a silver bullet
• Governmental performance is about accountability
  and transparency
• The feeling that state government represents
  citizens interest is at a record low
• Fewer citizens think taxes are relatively high
• One-third think money is not well spent

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Initiative 900 requirements

• Identify
• Best practices
• Services that can be reduced or eliminated
• Programs or services that can be transferred to
  private sector
• Cost savings
• Analyze
• Roles, functions and recommend changes,
  eliminations.

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I-900 requirements, cont.

1. Gaps, overlaps in programs or services.
2. Feasibility of pooling technology systems.
3. Departmental performance data, performance
   measures and self-assessment systems.
4. Recommend regulatory changes that allow entity to
   carry out its functions.

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Phases of a performance audit

• Outreach/research
• Notify entity of intent to conduct audit planning
  and survey work
• Audit planning/survey work
• Develop audit objectives, scope, methodology
• Notify top executive/entity of intent to conduct
  performance audit

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Phases of a performance audit, cont.

• Entrance conference with entity
• Field work
• Draft report
• Pre-exit conference with entity
• Receive comments from entity officials
• Exit conference
• Final report issued
• Legislative body holds public hearing within 30
  days

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Performance audit reports

• Will be available on State Auditors Web site and
  given to entity and legislative body
• Reports will contain
• Background, including results of outreach efforts
• Objectives, scope and methodology
• Recognition of exemplary or best practices
• Opportunities for improvement
• Fraud, illegal acts, violations of provisions of
  contracts or grant agreements and abuse, if found
• Conclusions
• Recommendations
• Response from interested officials

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Who will perform your audit?

• Local governments will be in contact with
• Chuck Pfeil, Director of Local Government Audits
• Chris Cortines, Local Government Performance
  Audit Coordinator
• Local government auditors
• Contractors, including subject-matter experts,
  that may be hired to conduct audits or provide
  assistance.

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What will we be looking for?

• Six performance audit themes
• Public interest
• How dollars flow between state and local
  governments
• Inherent, recurring challenges
• Matters that affect all agencies, example
  pensions or fuel purchases
• Administration
• Capital project management

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When will local audits start?

• Local government performance audits we plan to
  issue by April 30, 2007
• Educational Service District Audit

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When will local audits start?

• Local government performance audits we plan to
  issue by June 30, 2007
• Audit of public records systems
• K-12 Travel Practices

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When will local audits start?

• Local government performance audits we plan to
  issue starting June 30, 2007 and continuing
• Overtime practices
• Take Home Vehicles

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When will local audits start?

• Individual Local Government Audits Planned
• Sound Transit
• Port of Seattle

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State Audits to be issued

• State Audits that will be issued soon
• GA Motor Pool later this month
• DOT Inventory/Project Management (March/April)
• Collection of State Debt (April/May)
• Health Care Licensing (June/July)

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How are audits funded?

• Performance audits of state and local governments
  are not billed to the entity. The audits are
  funded from a small portion of the state sales
  tax.

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What criteria will the Auditors Office use?

• Chapter 7.28 of Yellow Book reads
• Criteria are the standards, measures,
  expectations of what should exist, best
  practices, and benchmarks against which
  performance is compared or evaluated. Criteria,
  one of the elements of a finding, provide a
  context for understanding the results of the
  auditIn selecting criteria auditors have a
  responsibility to use criteria that are
  reasonable, attainable, and relevant to the
  objectives of the performance audit.
• The following are some examples of possible
  criteria

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Criteria, cont.

• Purpose or goals prescribed by law or regulation
  or set by officials of the audited entity
• Policies and procedures established by officials
  of the audited entity
• Technically developed standards or norms
• Expert opinions
• Prior periods performance
• Performance in the private sector, or
• Best practices of leading organizations

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How do criteria factor into the performance audit
process?

• Our auditors ask how the entity measures its own
  performance.
• We determine whether we agree or disagree with
  those performance criteria.
• We ask whether additional criteria or benchmarks
  are necessary.

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What can you do to prepare?

• Get training/education on performance
  measurements
• Developing meaningful performance measures
• Model your program on other entities that are
  leaders in performance
• Take steps toward publishing goals, measures,
  outcomes

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Performance Audit contacts

• Chris Cortines, Local Government Performance
  Audit Coordinator
• cortinec_at_sao.wa.gov
• [phone]
• Chuck Pfeil, Director of Local Government Audit
• pfeilc_at_sao.wa.gov
• [phone]
• Jan Jutte, Director of Legal and Client Affairs
• juttej_at_sao.wa.gov
• [phone]
• Web site www.sao.wa.gov