COVID-19 Impacts on Auditing in a Municipal Environment

July 21, 2020

By Eduardo Luna, City Auditor for the City of Beverly Hills, CA, written for the Government Finance Research Center at the University of Illinois in Chicago.

At the beginning of the year, many local government auditors were busy working on completing their audit work plans. Audits were being started and completed, auditors were conducting field work, sampling and testing transactions, and previously issued recommendations were being followed up on.

Little did we know that in a few short months, our personal and work lives were going to be transformed by COVID-19. By March 2020, many local governments started recognizing the severity of COVID-19 and its impact on their ability to provide in person services and the potential impact of the health of residents, visitors, and employees. States, counties, and cities began declaring a state of emergenciy. Local government services focused on providing essential services, such as police and fire rescue, waste removal, water treatment and distribution, and waste water services. Other services that were non-essential, such as libraries, permit issuance, and audits were in many cases temporarily suspended.

As the number of COVID-19 cases exponentially grew, many cities faced protests associated with the death of unarmed black man in Minneapolis, MN. Protestors were calling for defunding police, increasing outside oversight of police departments, and reforming use-of-force policies.

Given that we are in a prolonged state of emergency, many cities are facing reduced revenues for the next 18 to 24 months, which will impact continued levels of service. In this environment, audit organizations should be more forward looking, as opposed to auditing programs that operated in previous fiscal years. Many city programs may not operate in the same manner going forward, but rather exist virtually (e.g., online classes, payments and permitting) or possibly not exist. The pandemic and protests have heightened the importance of the role of auditors in ensuring accountability and innovation in providing services in this new environment. Audit organizations have to plan and act to help guide their jurisdictions navigate this new reality. Some leading examples from west coast cities include the following.

• Sacramento, CA, Jorge Oseguera, City Auditor initiated COVID-19 business and resident community surveys to help ascertain the impacts of the COVID-19 pandemic on Sacramento residents and businesses. The survey results help inform the Mayor and City Council of residents’ top priorities needs. Sacramento residents’ top priorities related to reopening, public health, and social justice. Further, residents’ top priorities for City support are uninterrupted emergency services, support for small businesses, and access to accurate information about COVID-19.
• Berkeley, CA Jenny Wong, City Auditor recently announced that she would undertake a budgetary audit of the police department’s budget. She stated, “I have heard loud and clear the community interest in examining the police budget.” She plans to do a “deep dive analysis” of the department’s budget. It’s been 11 years since the City Auditor’s Office last audited the police department’s budget and staffing and budget.
• San Jose, CA Joe Rois, City Auditor at the request of the Emergency Operation Center’s directors undertook an audit of the City’s internal controls for documenting COVID-19 related costs to support receipt of FEMA emergency public assistance grants. The office plans to “monitor risks associated with tracking and documenting emergency expenditures to maximize potential reimbursements.”

In Beverly Hills, where I am auditor, given the uncertainty of the pandemic and its impact to city operations, I proposed a six-month audit work plan for the upcoming fiscal year. At mid-year, I plan to return to the City Council and reassess the situation and propose a new work plan for the remainder of the year. However, one of the key areas that we proposed auditing is to assess if the city of Beverly Hills is properly positioned for adapting to changing conditions in the ways society communicates, conducts business, and evolves around advancements in technology and eco-friendly products and services. Key operational areas we plan to address include

1. Analyzing the City’s telework program, including whether policies have been established, costs and savings, worker productivity, technological capacity, etc.
2. Identify services that can transfer to an online/remote environment for service-delivery. For those services that have, assess the success and areas for improvement.
3. Benchmark other cities to identify additional innovative approaches for creating a “Smart City” and compare the City’s readiness.
4. Solicit public, staff, and business input via the City Auditor’s Trust and Innovation Portal (TIP).

Through innovation and remaining adaptable, auditors can add value to the organization in these unstable times.

Eduardo Luna is City Auditor for the City of Beverly Hills, CA. The views expressed in this article are personal views and do not reflect the views or official positon of the City of Beverly Hills, CA.