Modesto has not had an in-house auditor for 4 years. When might that change?
Modesto voters on Nov. 8 approved expanding the pool of qualified candidates who can serve as city auditor, but the position — which has been vacant for four years — is unlikely to be filled soon.
An amendment to the city charter approved by voters in 2008 created the position. But since then, Modesto has had only two in-house city auditors, who served a total of about two years. During this time, the city has relied on consultancy firms to provide oversight, a practice some question.
“The two-word answer is accountability and independence,” said Ann-Marie Hogan, Berkeley’s former city auditor, about the value of a city having its own in-house auditor. Hogan — who was Berkeley’s auditor for 24 years until retiring in 2018 — advised Modesto’s Charter Review Committee on potential changes to the auditor position.
Mayor Sue Zwahlen said while hiring an auditor is among her top priorities, the City Council has a lot on its plate: Bringing its three new members up to speed, working its way toward police reform through its Forward Together initiative and setting its priorities for spending money generated by Measure H, the 1 percent sales tax increase voters approved last month.
A city auditor ensures a city provides services in an effective, efficient and equitable way and that safeguards are in place to prevent fraud. For instance, Hogan said, an auditor could look at a city’s street repaving program to make sure some neighborhoods are not favored at the expense of others.
She said an auditor also could look at a city’s ethical climate and recommend how it can follow the best practices for its employees.
In recent years, Modesto has had problems that may have been avoided if a city auditor had been in place. They include a breakdown in its purchasing practices that led to more than $16 million in spending that was not approved by the City Council or agreements.
Investigations found the city received the goods and services it purchased and no fraud. But they found an overworked purchasing division taking shortcuts to keep up with the work. A review in 2018 described a workplace culture in which city departments did not believe it was their job to keep track of their contracts or to question the actions of the purchasing division.
Hired and fired by council
Zwahlen said that hiring a city auditor is top priority for her and expects the council will take on the city auditor position after making progress on other priorities.
Zwahlen said residents are telling her and council members that they are keenly interested in the city implementing Forward Together and in how the city will spend Measure H. “It looks like (they) have come to the top,” she said.
The city auditor is one of Modesto’s four charter officers. The others are city clerk, city manager and city attorney. Of Modesto’s roughly 1,200 employees, the charter officers are the only ones who are hired and fired by and report directly to the City Council.
The council fired the city’s first auditor in 2010 after 18 months for failing to meet its expectations in uncovering inefficiencies. The council hired Monica Houston as city auditor eight years later.
But in November 2018, a divided council voted to pay her a $225,000 settlement to end her employment after about eight months on the job. The severance agreement included a provision that Houston and the city not disparage each other.
Houston became the focus of a political fight among council members. Some claimed Houston, who is Black, was subject to harassment, retaliation and even racism.
City officials vehemently denied any racial motivation in a series of job performance evaluations for Houston. Some council members said Houston tried to overstep her authority and got caught up in then-Mayor Ted Brandvold’s attempt to increase his control over city government.
Consultants vs auditors
A city auditor should not be confused with the CPA firms that cities hire to conduct annual audits of their financial statements. While city auditors can conduct financial audits, they focus on performance audits. They also conduct compliance audits to ensure the work a city has hired a company to do is carried out as spelled out in the contract.
Hogan, the former Berkeley auditor, said there is value in having a city auditor who is independent of the city manager and is able to develop in-depth knowledge of a city and its culture with the goal of making the organization better.
The changes to the auditor position were part of Measure G on the Nov. 8 ballot. The measure received 68.6% of the vote and amends the city charter.
Those changes include expanding the pool of candidates who can serve as auditor from certified public accountant and certified internal auditor to include chartered accountant and a candidate with an advanced degree and five years’ experience in government auditing, analysis or evaluation.
The changes also give the auditor a bit of independence from the council. For instance, while the auditor works with the City Council and its Audit Committee in creating an audit schedule, he or she has final say over the audits in that schedule.
But the council may request the auditor carry out special audits and investigations of limited scope to determine whether the information provided to the council is accurate and the “costs and consequences of the recommendations made to the council.”
The City Council voted to put all of the charter review commission’s recommendations for the city auditor on the Nov. 8 ballot except for one — strengthening the job protections for the auditor by requiring five votes among the seven council members to fire an auditor.
Council members decided to keep the number of votes at four, the same number required to hire or fire any of the four charter officers.
The measure also amends the charter to ensure the auditor position does not stay vacant long. The amendment states that within 30 days of a vacancy, the mayor shall start the recruitment “by recommending the selection of a recruitment firm or other recruitment process ... .”
City Attorney Jose Sanchez said in a Thursday text message the Measure G charter amendments will not take effect until they have been accepted and filed by the California secretary of state’s office.
He did not provide additional information on when that may take place, and the secretary of state’s press office did not respond to a Thursday email.
This story was originally published December 2, 2022 at 9:51 AM.
