Performance Audit in Washington

How I-900 affects local governments

Jan JutteDirector of Legal and Client Affairs

WASHINGTON STATE AUDITOR’S OFFICE

Puget Sound Finance Officers Association, February 14, 2007

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Overview Brian Sonntag’s 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 Sonntag’s 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 AuditAn 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 Auditor’s 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 requirementsIdentify: 1. Best practices2. Services that can be

reduced or eliminated3. Programs or services that

can be transferred to private sector

4. Cost savingsAnalyze:5. Roles, functions and

recommend changes, eliminations.

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I-900 requirements, cont.

6. Gaps, overlaps in programs or services.

7. Feasibility of pooling technology systems.

8. Departmental performance data, performance measures and self-assessment systems.

9. 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 Auditor’s 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:

o Sound Transito Port of Seattle

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State Audits to be issuedState Audits that will be

issued soon:o GA Motor Pool – later this

montho DOT Inventory/Project

Management (March/April)o Collection of State Debt

(April/May)o 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 Auditor’s 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 audit…In 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.o “Purpose or goals prescribed by

law or regulation or set by officials of the audited entity

o Policies and procedures established by officials of the audited entity

o Technically developed standards or norms

o Expert opinionso Prior periods’ performanceo Performance in the private

sector, oro Best practices of leading

organizations”

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How do criteria factor into the performance audit process?

o Our auditors ask how the entity measures its own performance.

o We determine whether we agree or disagree with those performance criteria.

o 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 contactso Chris Cortines, Local Government

Performance Audit Coordinatorcortinec@sao.wa.gov(360) 725-5570

o Chuck Pfeil, Director of Local Government Auditpfeilc@sao.wa.gov(360) 902-0366

o Jan Jutte, Director of Legal and Client Affairs

juttej@sao.wa.gov(360) 902-0363

Web site: www.sao.wa.gov