Don’t Fear the Auditors
by David Deutsch
Three weeks after Hurricane Katrina devastated the coastal regions of Louisiana, Mississippi and Texas, my former boss and I were dispatched to New Orleans to audit an emergency $47 million bus contract which funded mass-transit buses that shuttled residents around the New Orleans metro area, including neighboring parishes. We spent our first three days there on a battleship, the USS Cape Kennedy, docked at the Poland Street Wharf, because New Orleans had no power. We could see downtown from the deck of our ship, and noticed that there were no light coming from any building there. It was truly a gut-wrenching and terrifying experience, and not one I would like to recreate.
A few weeks later, from late October through early November, we were sent back for an additional nine days for follow-up audit work. As I was there through Halloween, people asked if I dressed up ...
“Of course I dressed up for Halloween,” I’d reply, “It was Halloween in New Orleans, after all.”
“So,” my inquisitor would ask, “What did you dress up as?”
My voice dropped and I whispered ominously, “I dressed up as the scariest thing on Earth. A Federal auditor.”
Shudder.
Getting a call from auditors can be unnerving for government workers, and for good reason: from seemingly out of nowhere your office gets a memo saying that you will be hosting folks who will go through your paperwork and see what your agency is up to. Before you know it, a group of serious people in serious suits with serious looks on their faces comes barging in and start asking you and your colleagues seemingly-cryptic questions about your agency's work. Getting audited probably feels like a sharp slap in the face, as these strangers who don't know a thing about the local conditions surrounding government projects start snooping, and you have no choice but to comply with every request they make. Well, the truth is you don’t have to comply ... but if you choose that path, you’ll probably get indicted and put in jail.
Being audited does not have to be scary or intimidating though. Sure, it’s easy for me to say, as I was on the other side of the fence: the guy with the power, authority and nifty-looking Federal credentials. Nonetheless, I would like to explain to you, nervous government employee, how auditors work, the scope of auditors' authority, and perhaps offer a different perspective on the audit process that might help you out some day.
First, a little background is in order. In 1978, the Inspector General's Act was passed, mandating that every agency in the Federal government set up an independent audit and investigatory arm. The IG has a unique role in government, theoretically rising above partisan politics and accountable only to Congress and the President. The Act armed IGs with quite a mandate: to identify, prevent and eliminate waste, fraud and abuse in the government. Auditors can request any document at any time, so long it is within the scope of their work, and government employees absolutely must comply with the IG request or be indicted on charges of obstructing a federal audit. They are among the most powerful people in government, and IGs regularly testify before Congress about their findings.
There are limits to an auditor’s powers, however. Once their audit work is completed, IGs cannot force any agency to make any changes. They can only issue reports and recommendations. Granted, those reports carry significant weight, and agencies would be remiss to not follow one, lest they face the wrath of Congress, who might cut their funding for non-compliance. But auditors themselves cannot order anyone to do anything. Additionally, auditors are not law enforcement: they cannot make arrests and they don't carry guns. However, it is worth noting that IGs have a criminal investigatory arm, which has law enforcement powers including the ability to make arrests, serve warrants, and put people in jail (I will talk a little about these folks in my next feature).
And the scope of audits is extremely narrow. Auditors don't and indeed cannot go on fishing expeditions: if they stray even slightly from the narrow scope of the audit, they will end up creating an unbelievable amount of trouble for themselves, something auditors are very reluctant to do.
As I suggested earlier, my former supervisor and I were sent to New Orleans to oversee the Federal Transit Administration's (FTA) implementation of the abovementioned $47 million bus contract in post-Katrina New Orleans, and the FTA folks were none-too-pleased about our presence. In fact, one of the chief people at the FTA later complained to Congress that the IG's office was “married” to them from the project’s inception. Little did she know my supervisor was in that hearing, and needless to say that didn't go over very well in our office.
But the fact is we were not sent to New Orleans in an adversarial role. We repeatedly tried to impress upon officials that we were there to help them oversee and monitor the project, not get in their way. But the more paranoid and reclusive they became, the more we responded with increasing skepticism. After all, why should they be nervous if they weren't doing anything wrong?
Every time we requested assistance from the FTA they threw up roadblocks, saying that the urgent situation required their undivided attention. That point had a great deal of merit: the devastation of New Orleans is difficult to comprehend or explain, and those early days were especially frightening, given the rampant lawlessness and human devastation. For instance, my supervisor and I would drive the wrong way down one-way streets near the French Quarter with no fear of law enforcement. Because there was no law enforcement. People parked their cars anywhere they darn well pleased, including on the tracks of the temporarily-defunct St. Charles trolley line.
So, yeah, FTA folks had their hands full. But by reacting with fear, defensiveness and recalcitrance, they only heightened our suspicions, creating an unnecessarily difficult work environment. To some extent this is because they did not fully understand and/or appreciate the role of Federal auditors. For another, they probably just wanted to get their work done and get out of there.
So if your agency is facing an audit, what do you do? That depends. If your office is corrupt and you are a part of the corruption, you should probably open your legs, bend over, and kiss your ass goodbye. They will find out about your BS no matter how good your song and dance. In fact, if you are in this situation, obstructing an audit will only lead to further charges against you down the line. Good auditors—and you should assume they are all good auditors—have many of the answers they are seeking before they even meet with you, so don't even think about lying to them. They are extremely smart and can get to the bottom of issues whether you obstruct them or not. And, as I said earlier, although they do not have law enforcement powers themselves, others in their offices do. I know of cases where people have tried to obstruct audits and gotten into big trouble.
But if you aren't corrupt and you find yourself on the wrong side of an audit, then for the most part you don't have anything to worry about. Audit findings consist of recommendations to improve policies and processes, and usually do not say that any particular individual is incompetent. Unless there in fact were people who were incompetent, at which point their report will probably state “weak controls” as opposed to “Mary Jane is such a loser.” My recommendation in this case is to be honest and upfront with the auditors, giving them all the information they seek while not being overly generous with what you offer; after all, the auditor/auditee relationship is supposed to be adversarial. Remember, the scope of an audit is very narrow, so offer only information pertaining to what they are asking for. But do not even give the appearance of obstruction, or you will face serious consequences.
What if you find yourself somewhere in the middle? While you aren't explicitly corrupt, you know how completely dysfunctional your office is, and more than once you wish you could change things. In this case, you could find yourself in the shoes of the whistleblower, and auditors will be your best friend. You can anonymously contact them—preferably after work hours, and on your private phone—and alert them to specific instances of wrongdoing. Remember to document everything, though; making unsubstantiated charges likely won't get you anywhere.
There is a lot more that goes into being an auditor, but this brief overview will, I hope, give you a small sense of what to expect if you face an audit, and perhaps help dispel some fears about the process.
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