Performance Audit in Washington

1. Performance Audit in Washington How I-900 affects local governments Puget Sound Finance Officers Association, February 14, 2007 Jan Jutte Director of Legal and Client Affairs WASHINGTON STATE AUDITOR’S OFFICE

2. 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

3. 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 Brian Sonntag’s vision for performance audit

4. Definition of Performance Audit An 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

5. Work done by the Auditor’s Office: Financial audits Federal single audits Accountability (state and local compliance/fiscal integrity) audits Performance audits Fraud investigations Integration of performance audits

6. 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

7. Outreach efforts Six top performance audit priorities for citizens (not in order): • Public schools • Health care • Transportation • Social services • Public safety • Environment

8. 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

9. Initiative 900 requirements Identify: • Best practices • Services that can be reduced or eliminated • Programs or services that can be transferred to private sector • Cost savings Analyze: • Roles, functions and recommend changes, eliminations.

10. I-900 requirements, cont. • Gaps, overlaps in programs or services. • Feasibility of pooling technology systems. • Departmental performance data, performance measures and self-assessment systems. • Recommend regulatory changes that allow entity to carry out its functions.

11. 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

12. 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

13. 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

14. 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.

15. 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

16. When will local audits start? Local government performance audits we plan to issue by April 30, 2007: • Educational Service District Audit

17. 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

18. When will local audits start? Local government performance audits we plan to issue starting June 30, 2007 and continuing: • Overtime practices • Take Home Vehicles

19. When will local audits start? Individual Local Government Audits Planned: • Sound Transit • Port of Seattle

20. State Audits to be issued State Audits that will be issued soon: • GA Motor Pool – later this month • DOT Inventory/Project Management (March/April) • Collection of State Debt (April/May) • Health Care Licensing (June/July)

21. 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.

22. 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:

23. Criteria, cont. • “Purpose or goals prescribed by law or regulation or set by officials of the audited entity • Policies and procedures established by officials of the audited entity • Technically developed standards or norms • Expert opinions • Prior periods’ performance • Performance in the private sector, or • Best practices of leading organizations”

24. How do criteria factor into the performance audit process? • Our auditors ask how the entity measures its own performance. • We determine whether we agree or disagree with those performance criteria. • We ask whether additional criteria or benchmarks are necessary.

25. 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

26. Performance Audit contacts • Chris Cortines, Local Government Performance Audit Coordinator cortinec@sao.wa.gov (360) 725-5570 • Chuck Pfeil, Director of Local Government Audit pfeilc@sao.wa.gov (360) 902-0366 • Jan Jutte, Director of Legal and Client Affairs juttej@sao.wa.gov (360) 902-0363 Web site: www.sao.wa.gov