Critic says city's audit plan lacks independent oversight

Three elected officials propose tripling the audit staff at Minneapolis City Hall, but a prominent critic argues that their proposal would undercut the independence of the financial checkers.

Mayor R.T. Rybak and Council Members Barbara Johnson and Paul Ostrow propose hiring three internal auditors, the minimum recommended by outside reviewers who said the city isn't adequately guarded against fraud and misspending.

Carol Becker, who pushed for the review, supports adding the auditors. But she's a publicly elected member of the city's Board of Estimate and Taxation, which has overseen the work of auditors but would lose that oversight authority under the proposal by Rybak and council leaders. Instead, auditors would be directed by the city coordinator, which undercuts their independence in Becker's view.

"It is a slap in the face of voters who overwhelmingly voted to keep a Board of Estimate and the independence it brings to the audit function," she said in a discussion forum post Thursday.

Becker's political stature has grown since she led a successful campaign to reject a charter proposal that would have given the board's powers to the City Council. She recently won reelection with more votes than any city politician besides Rybak.

The board sets the city's maximum levy, authorizes borrowing and oversees internal audits. It consists of two directly elected members, the mayor, council president, budget chair and a park commissioner.

Under the proposal by Rybak and the council leaders, audits of the mayor, council or city coordinator's office would go to the board; but those for other city departments would go to an audit committee of three council members. The council would be involved in any corrective action. Ostrow argued that the dual track of reporting preserves the independence of the auditors but leaves the staff less isolated.

The proposal was discussed by the board Wednesday without appearing on its agenda and is on a fast track. A public hearing is slated for Dec. 14 on the proposal, which requires a city ordinance revision. The council could act on it by its final scheduled meeting for the year on Dec. 18. "This change would be put in place with the lame-duck council," Becker said. The board decided to slow the hiring of an auditor, although it has none now, because members reasoned that a bigger staff, which needs council action, could attract better candidates.

Becker said it's fine for the audit staff to be administratively linked to the coordinator for routine supervision. But when she campaigned to keep the board, "the idea of having the auditor not reporting to those that are being audited was key."

Some other local government units with internal auditors have administrative relationships with a key administrator, but their audit work is directed by mixed committees of insiders and outsiders. Hennepin County's audit committee consists of two outside members, two commissioners and the county administrator. The Metropolitan Council's audit committee has three council members and three outside financial experts.

"It's relatively standard in the industry," said Katie Shea, who supervises the Metropolitan Council's internal auditing and served on the outside committee that reviewed city audit procedures. But Ostrow told the board Wednesday that he prefers that auditors report to the coordinator rather than the board.

Steve Brandt • 612-673-4438