Arguing that a proposal for increased city audits would result in duplicated efforts and wasteful spending, Baltimore Comptroller Joan Pratt and City Auditor Robert L. McCarty have submitted a letter to members of the City Council asking them to amend the hotly debated audits bill, which is set for a vote Monday evening.
"Much of the work that is performed each year ... is the same work that would be performed in the audit of agencies," Pratt and McCarty wrote, arguing the city already conducts an annual financial audit that covers all agencies and doesn't need a second outside firm also to do so. "Therefore, it would be a duplication of effort and expense to have this work performed again. This would neither be a cost-effective nor efficient use of taxpayers' funds."
In the letter, Pratt submitted a request for three amendments to the legislation that she says would clarify the bill and avoid duplicated efforts and expenses. McCarty did not take a position on the bill to maintain his independence, the letter states.
A weakened version of the intensely debated bill won preliminary approval last month, meaning it could go before voters in November after a final council vote Monday night.
The amended legislation would require 14 city agencies to be audited at least once every four years. The original bill, sponsored by City Councilman Carl Stokes, called for audits of all 55 agencies every two years. Stokes says some agencies, including the Department of Recreation and Parks, haven't been audited in decades.
The Department of Audits, which has 37 auditor positions — 32 of which are filled — falls under Pratt's office. She has said conducting the increased audits would be possible if Mayor Stephanie Rawlings-Blake provides the funding in her budget. The mayor has recently increased funding to the audits department, but the bill could require the city to allocate several million more dollars to McCarty's office. The city has conducted between 10 and 20 audits each of the past three years, including a high-profit audit released in February that found widespread problems in city water bills.
Pratt also submitted an op-ed to The Baltimore Sun that ran in Saturday's editions. It is included below:
Pratt responds to audit questions
Amid public scrutiny of Baltimore’s auditing practices, the city’s comptroller explains her department’s procedures and past
By Joan Pratt
On July 30, The Sun published an op-ed by Mary Alice Ernish, founder of the grassroots non-profit Audit Baltimore, which contained a series of questions about the city’s auditing practices. This week, Comptroller Joan Pratt, who oversees the city’s auditors, provided responses.
Why have some city agencies not been audited in over three decades?
The city’s financial statements, which are prepared by the Department of Finance, include all of the expenses and revenues of all city agencies. These expenses and revenues are tested as part of the Comprehensive Annual Financial Report (CAFR). This testing determines if the expenditures and revenue are recorded properly and in accordance with city policy and procedures. Therefore, although individual audits have not been performed for all agencies, the CAFR provides assurances that the financial statements are presented fairly. Similarly, the federal financial assistance to agencies is included in the city’s annual Single Audit.
Why are individual financial statements of city agencies not being prepared?
Pursuant to the city charter, preparation of the financial statements of the city is the responsibility of the Department of Finance. Finance is required to supervise and direct the accounting of the city agencies.
Please explain the procedure by which financial data of the city’s agencies are collected and included in the city's CAFR.
The Department of Finance prepares the city’s CAFR from the financial data contained in the accounting records. Each city agency’s financial data is included in the city’s accounting system.
Is the CAFR reliable, given comments by Budget Director Andrew Kleine that “most city agencies, boards and commissions do not prepare annual financial statements, and lack the expertise to prepare these documents”?
The reliability of the CAFR is based upon the Department of Finance’s maintenance of all financial accounts and its preparation of the city’s financial statements. The Department of Audits reviews the CAFR’s financial data to ensure that all financial transactions of the city are included in the CAFR.
Why were copies of the 2010 and 2011 CAFR’s not available on the comptroller's website?