Palo Alto Weekly

Spectrum - April 29, 2011

On Deadline: Will a good auditor/watchdog head off Palo Alto waste, loss and scandal?

by Jay Thorwaldson

As Palo Alto searches for a new auditor to replace Lynda Brouchoud, who has resigned to take care of a new baby and her family (the ultimate auditing challenge), the question arises as to qualities the city needs in that pivotal job.

Think watchdog. Think brave. Think intelligent. Think fair. Think perceptive, diplomatic, honest, experienced — the panoply of Boy Scout Oath qualities, or in this case perhaps Girl Scout ideals.

The city's website says the goal is to "promote honest, efficient, effective, and fully accountable city government."

In her 3 1/2 years as auditor, Brouchoud has filled the bill, and has done "excellent and diligent work," Mayor Sid Espinosa said after she announced her pending departure in early March.

Others agree. The Association of Local Government Auditors recently gave an audit of the city's vehicle fleet its Knighton Award, recognizing it as the "best performance audit of 2010 for a small office."

Brouchoud said she is pleased to leave the city "on a high note with a solid record of valuable contributions and a team of highly dedicated and qualified staff." One of her staff members, Mike Edmonds, is serving as interim city auditor (as he did during Brouchoud's maternity leave) while the city seeks a new permanent auditor.

Edmonds and staff last week issued a mid-year report on the status of past auditor recommendations. It seems that numerous recommendations from past audits weren't being implemented, or implemented so slowly that they were more tortoise than hare. That April 19 report (available for download at www.cityofpaloalto.org/knowzone/reports/auditor.asp) lists a dizzying array of topics the auditor's office has touched over recent years.

Before Brouchoud joined the city, City Auditor Sharon Erickson likewise won respect and praise for her leadership of the office, including calling some tough shots during her 6 1/2-year tenure in the job from July 2001 to early 2008. A City Council resolution cited her 113 audits and informational reports that included 305 recommendations, and said her financial audits saved the city $2 million a year.

Then-Mayor Larry Klein called her "one of the most respected members of the city staff," and cited her "tenacity, high ethical standards, and grace." Applicants take note: Add tenacity and grace to my list above.

But city auditors were not always as visible or as successful as Erickson and Brouchoud. Erickson's predecessor, William Vincent, served as city auditor from May 1992 to October 2000 — when he abruptly disappeared from the office one afternoon. City Council members had vowed to each other not to discuss his departure, and for many weeks his leaving had an aura of mystery about it as a local daily newspaper posted story after story giving different theories.

The Weekly finally was able to figure out the primary reason: He had alienated city staff members through his personal "find something wrong" approach to the point that his reports were going unread, even by then-City Manager June Fleming. He was accused of grabbing for headlines rather than seeking real change.

The so-called "Erickson Model" of being a city auditor, now perhaps the "Erickson/Brouchoud Model," entails a much more constructive style of making solid recommendations, of working with department-level people to understand the need for changes and to implement the findings.

Yet while the last three auditors have been visible, a series of earlier auditors have maintained the office during its low-profile years. It was created by city voters in 1983 to replace a still earlier position that was mostly a routine review of city expenditures rather than the "performance audit" that today's job includes.

But for various reasons no auditor was named to the position until January 1987, when Michael Northrup was given the job. He served until April 1990.

George Beck was named city auditor in March 1991, but only stuck in the job until December 1991. There may be an historical footnote lingering in that short tenure.

Auditing staff member Tracy Kwok filled in as interim city auditor between the two initial hires.

Back to the present. The big news in the April 19 mid-year update report is that the auditor's office has made major strides in catching up to a daunting backlog of recommendations.

The report covered the status of 82 open audit recommendations from 13 different audit reports — including 46 recommendations outstanding after the department's last status report of June 30, 2009.

The report tactfully perhaps does not sum up why the various departments were tardy in implementing recommendations, but some reasons are given under detailed specific items. There have been major reductions in the backlog over the past couple of years, the report notes:

"In 2008, there were 142 outstanding audit recommendations. During the last two years, the Auditor's Office has made a concerted effort to work with each department to identify challenges and next steps towards implementation. As a result, city staff completed or resolved 125 (88 percent) of these backlogged recommendations.

"Presently there are 32 recommendations that are in process, 24 of which are from audits issued since April 2010."

Nine recommendations that relate to city infrastructure needs should be deferred until June 2012, when a special "Infrastructure Blue Ribbon Commission" finishes assessing and prioritizing nearly $500 million in backlogged infrastructure (items such as buildings, facilities, streets and sidewalks, parks).

The array of audits covers really big things — things that would generate big headlines if they go really wrong, or someone embezzles funds. This can reach down to neighborhoods, as in the recent Greenmeadow Community Association scandal in which the former administrative manager allegedly stole $65,000 by fraudulent use of the group's credit-card.

Perhaps neighborhood groups, which often function as little governments, need to invest in more thorough auditing. Certainly state and federal governments need all the auditing they can get, as Gov. Jerry Brown is discovering in recent vehicle and cash-repayment laxity.

Since 2003, the city auditor's staff has reviewed overtime expenditures (2003), administrative restructuring efforts (2004), contract contingency funds (2005), parks maintenance (2005), street maintenance (2006), library operations (2007), employee ethics policies (2008), the city infrastructure backlog (2008), ambulance billing and revenue collection (2009), a police investigative fund (2009), city telephone rates and charges (2009), city vehicles utilization and replacement (2010), citywide cash handling and travel expenses (2010).

Even a city that rates in the 90th percentile for outstanding services and as a place to live compared to other cities nationwide needs to have a good watchdog.

Former Weekly Editor Jay Thorwaldson can be emailed at jaythor@well.com.

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