​​​​Under Siege

Public sector auditors can face intimidation, isolation, retaliation, suspension — even termination — just for doing their job.

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In 2016, the Houston Independent School District’s Board of Education suspended all of Chief Audit Executive (CAE) Richard Patton’s duties for “misconduct and other performance concerns” — according to the board’s public explanation. An outside attorney investigated what Patton points out is “a frivolous claim that I used district resources to scan approximately 10 pages of personal documents over a period of roughly two years.” Despite numerous requests to release the results of the investigation to the public, the district has not done so. After the investigation, Patton returned to work, but he says his duties and responsibilities were “diminished by the board in a number of ways.” Just before the suspension, his team worked on several internal investigations and cooperated with the U.S. Federal Bureau of Investigation and district attorney on matters those agencies had initiated. Because of what he calls clear retaliation and the reduction of duties — which, he notes, “seriously impacted the district’s audit charter and my team’s ability to comply with The IIA’s Code of Ethics” — he took legal action.

The sad reality is that public sector auditors can face retaliation — isolation, smear campaigns, diminution of duties, even suspension and termination — just for doing their jobs. If the fruits of the audit function’s labors conflict with an agency head’s political agenda, too often the political agenda wins and the auditor loses. The threat is so real, and the stakes so high, that many practitioners embroiled in sticky political situations have to inform their colleagues anonymously — or with the approval of a lawyer. That’s why Patton’s tale is attributed directly to him; all his comments have been approved by counsel so they don’t impact the ongoing litigation.

Solutions are few, but they do exist. If other practitioners know what to watch for and how to prepare for the worst, some may avoid the untenable situations their colleagues deal with. As an internal auditor under fire at a mid-level school district says, “Exposure of these issues may help someone else.” Ultimately, of course, some public sector auditors caught up in politics will simply have to fall on their swords. At the end of the day, the public servant trying to suppress the truth likely won an election or received an appointment from someone in office, so the auditor trying to tell the truth may be pressured to get on board or get out. But in many cases, targeted relationship-building and a firm grasp of the agency’s governance structure will go a long way toward avoiding catastrophe.

POLITICAL MOTIVATION

Protect Yourself

Internal auditors with experience in political challenges offer these additional tips:
  • Know what to watch for. “Your first sign of trouble is when you are not provided freedom to conduct sensitive work activities,” Houston Independent School District’s former Board of Education Chief Audit Executive Richard Patton says. And an anonymous local school district auditor points to “a lack of communication, such as no or delayed responses to requests to meet or to provide documents” as a sign that trouble could be brewing.
  • Watch the tone of a report when drafting it. “You can change two or three words in the header and not change the report,” Kip Memmott, audit director for the Oregon Secretary of State, says.
  • Document, document, document. Verify, verify, verify. George McGowan, City of Orlando’s director of audit services and management support, urges thoroughly discussing each issue with the parties involved to understand the root cause. “Every engagement needs care and feeding,” he says. “Those being audited need to feel directly involved in both understanding and then resolving the issues.”
  • Make sure that any time an audit involves criminal or fraudulent findings the appropriate authorities are brought in. Indeed, any time a situation becomes controversial, bring another auditor to take notes.
  • Create a paper trail. This will back up your findings and the way you present them.
  • Understand that going to the media has serious repercussions. Memmott states, “Going to the media will not protect you. In fact, it will backfire.”
  • Have a thick skin. Auditor Steve Goodson advises, “Try to understand the situation from the many various perspectives. Be as flexible as you can.”
  • Hire a lawyer.

The political motivation to punish an auditor often involves information that’s incriminating to the person who ordered the audit in the first place — sometimes under a law or regulation. In one case, an audit investigation found evidence that a school board CEO had been less than honest about his credentials; in another, a culture audit — which, in law enforcement is often going to be politically sensitive — contained pretty damning results; and another uncovered fraud in a university’s program accepting bodies of people willed to science. Often, it’s a more mundane reason, like auditors looking into contracts or programs that executive directors don’t want exposed or, as in Patton’s case, assisting outside agencies in their investigations. Sometimes it’s as simple as an executive director who insists that the audit function in general has a “gotcha” mentality. In fact, one anonymous practitioner facing retaliation at a local school district says she has come to believe that “any audit that falls under the chief operating officer or chief financial officer’s (CFO’s) jurisdiction or any audit that makes a board look like it isn’t providing governance and oversight will be political.”

The means of punishing auditors vary as well, within fairly defined limits. The mid-level school district auditor reports to a superintendent who always threatens termination. There are also common reports of campaigns to discredit CAEs who ruffle the wrong feathers — including suspiciously conducted reviews of their performance — and practitioners being isolated, often by “people who were friendly a year ago,” as the mid-level school district auditor puts it, adding, “Maybe they’ve been told they need to stay away from me to protect themselves.”

Retaliation also often includes reduction of duties. Patton notes that the ethics and compliance function was totally removed from the CAE’s duties, and the audit management team received correspondence from the district’s lawyers to cease existing investigations. Patton says he also received a letter stating that work activities outside of the audit plan must be approved by the whole board before beginning.

Other auditors report not being allowed to fill vacancies and being ordered to stop conducting operational audits. In some cases, the audit plan is even pulled from the board’s agenda, executive leadership makes sure discussion is delayed or disrupted, or management and board members cease regular communications with the audit department. Auditor Steve Goodson was once in an all-too-familiar situation: A CEO at “a major Texas state agency” told him on the first day on the job — after he was hired by the board — that if he wanted to work there, he was to accept instructions only from the CEO, regardless of what the board instructed him to do. “He often directed which areas of the organization I would not be allowed to audit,” Goodson recalls. “These were some of the same areas the board had instructed me to audit, so I was in a tight spot. For four years, I worked hard to navigate and negotiate an appropriate path for the audit function.”

DUE PROCESS

Sometimes the retaliation is more subtle, and never really impacts the auditor. Kip Memmott, audit director for the Oregon Secretary of State’s Office, once worked for a county government body where he conducted a performance audit that, he reports, unearthed a lot of problems. The CFO he reported to didn’t want to ruffle any feathers, but told him to proceed if he wanted to and the problems would be fixed, but the report wouldn’t be issued. “I felt like my standing fell and communications were superficial from then on,” Memmott says. The happy ending was that the CFO departed soon after.

Mike Peppers, on the other hand, reports he has not “been in a situation in my 25-year career where I’ve had pressure to suppress something in a report.” The CAE at the Austin-based University of Texas System credits that mainly to his perception that public sector political retaliation “is a little less likely because so much of what we do is public, and it has been said that sunshine is the best disinfectant.” Much of his output is public record, he explains, and audit committee meetings are broadcast live on the internet. “My colleagues in private companies have trouble wrapping their heads around that,” he quips.

Peppers does, of course, recognize that political challenges exist. He recommends developing strong relationships with audit committees so they “completely understand the role of internal audit and realize the responsibility they have to encourage an open and ethical environment.” That may be in the agency’s or department’s charter, and if it’s not, the CAE needs to drive it, he urges.

“CAEs need to recognize the important elements of protection, and know their limits within them, so if a situation arises, they are prepared to have those tough conversations,” Peppers says. “The first conversation should not take place when there’s a problem.” Similarly, auditors should know the process for removing a CAE. “No one would want to make excuses for a bad CAE,” he says. “Any time a CAE needs to be removed, there needs to be a strong process in place for the action to be reviewed in the sunshine to make certain there wasn’t anything inappropriate” in how the termination was handled. While it’s probably the audit committee’s responsibility to ensure that’s the case, new internal audit hires should make sure, when they come into the role, that the process is clear.

Auditors who’ve been burned by political pressure agree. “It starts in the interview process,” the county-level school district auditor says. “I wasn’t told the truth when I interviewed. I should have been more cautious and said it was a deal breaker if I didn’t talk to the board. You have to square all of that up before you start. Once you’re hired, you don’t have a whole lot of places to go for help.” That anonymous auditor adds that you should definitely establish boundaries at the interview and make sure to vet the reporting structure at the place they’re going to work — and to walk away if you’re not comfortable. If you’re deceived, it’s a tough place to be. For his part, Patton even advises negotiating a contract that allows the audit department to have its own outside attorney.

FORGING RELATIONSHIPS

Once on the job, all auditors should build relationships with the people with whom they work, Memmott advises. Start by winning over staff, he suggests, to “learn who they are and get a feel for trends. Meet your colleagues, understand what they’re working on and the context they’re working in.” That should be clear from governance documents. Internal auditors should then use that insight to shore up potentially troublesome relationships and make sure the governance documents that define the internal audit function are known to, and understood by, everyone. Don’t assume anyone has read your charter, Memmott warns. “Try to make sure everybody is on the same page when something happens.” Take a look at past audit reports, too, he suggests. What do they look like? What have the responses been? Has there been a high level of agreement or disagreement? One sign of trouble, he notes, is terminated audits or bad or no responses to them.

Internal auditors also can improve their chances of surviving a political challenge by maintaining strong communications with management and showing through their work that they value being part of the team, says George McGowan, director, audit services and management support, for the City of Orlando, Fla. “Internal auditors are just as much managers over the quality of city services as those in the operating departments,” he says. “We need to demonstrate this level of care when we interact with managers. They need to know that we want the city to be successful in delivering its services and we don’t get any pleasure from pointing out flaws and troubles.” That doesn’t mean shirking duties, he emphasizes. “In the end, that responsibility does fall to us,” he notes, “and it is necessary to develop a record of the conditions we find as well as what can be done to change the outcome to a positive.”

When crisis arises, and with it the potential for political retaliation against an internal auditor whose revelations may have sparked it, smart practitioners will keep the lines of communication open, Peppers comments. Whenever the CAE sees that there’s going to be an audit that might result in reputational damage, he or she may err, unwisely, on the side of nondisclosure, he explains, adding, “But if the CAE is working with management through all of those times and keeping people informed throughout the process, that’s going to help down the line.”

Memmott agrees. “Right up front, let people know you’re not here to play ‘gotcha,’” he says, also calling for frequent updates. “If it’s communication overkill, they’ll tell you.” And auditors must do more than simply point out what’s wrong. You have to tell them how you can help them,  he urges. “If you can give them real examples, that helps.” And remember that people want to be told when things are working well, too. “If you do a lot of that,” he says, “you can clear out a lot of the conflict.”

Goodson also advises leaning on the International Standards for the Professional Practice of Internal Auditing and educating stakeholders about what it means to be an internal auditor and what that means as far as the particular circumstance. Essentially, assure stakeholders that you understand what you’re dealing with.

HARD CHOICES

The sad reality is that public sector auditors who are being victimized by political retaliation oftentimes have no choice but to resign. Says the local school district auditor, “It’s very difficult to make a change if the organization is dysfunctional. Sometimes you can make renovations to a house that will improve the functionality, but sometimes you just have to declare the house condemned and start over.” Memmott agrees. “I don’t think there is a lot of protection,” he points out, unless the practitioner is a mid-level or higher manager with civil service protection. And even then, he says, “you can make it tough for your boss to get rid of you, bloody everybody, and still lose.” And the bottom line is this: If the agency head is an elected official, the auditor needs to find a new job. It’s the elected official’s domain, but you can choose not to work in that environment. Auditing “requires that courage,” Memmott adds. “It’s a reality of the game. And the higher you go, the more you have to accept that you’re out there on your own.”

Whether a victim of the politics of internal auditing or one who’s avoided that frustration, “Never compromise your principles or do anything illegal,” the mid-level school district auditor stresses. Part of that is learning not to take the treatment personally. “You definitely have to reconcile those feelings and understand that you’re the one doing the right thing. Don’t try to fit in,” that anonymous practitioner in a difficult situation urges. “Otherwise, you make emotional, bad decisions when you need to stay on the right track.

Read “The Public Sector Culture Conundrum” from the American Center for Government Auditing (ACGA). Note that IIA public sector members are automatically ACGA members.

Russell A. Jackson
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About the Author

 

 

Russell A. JacksonRussell A. Jackson<p>Russell A. Jackson is a freelance writer based in West Hollywood, Calif.​</p>https://iaonline.theiia.org/authors/Pages/Russell-A--Jackson.aspx

 

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