Most large businesses conduct a financial audit at least once a year. They also conduct periodic program audits of essential functions. Examples include quality audits, sales audits, production audits, and safety and environmental audits. Every government agency of non-trivial size should be audited on a regular basis to verify that its activities are consistent with applicable laws, regulations, executive orders, and department policies. The audits should also assess the effectiveness of the agency in achieving its purposes. (The purpose of each agency and program should be clearly stated in the enabling legislation.)
Program audits are a big nuisance. I dislike them despite having participated in many as either host or auditor. Although audits are not fun from either perspective, they are the only way corporate management can verify that the various departments and divisions of a large corporation are performing effectively in conformance with applicable law and policy. The U.S. federal government is by far the largest and most complex corporation operating within the United States, and in some ways the least transparent. It is, therefore, the most in need of routine audits. But state and local governments need audits as well. Audits are the only way the voting public and our elected representatives can verify that our agencies are performing effectively in conformance with applicable laws and policies.
One challenge is finding auditors who are knowledgeable of the agency, and applicable laws and policies, who are at the same time independent of the agency being audited. For auditing a city or school district, auditors can be brought in from other cities or districts. For auditing a federal agency, perhaps federal employees from one agency could be cross-trained to audit another federal agency. These could be supplemented by auditors from related state agencies. Private auditing firms can also help, but cannot be fully independent if they are hired by the organization they are auditing.
EPA might be audited by a team of individuals from a variety of federal agencies that deal with health, federal lands, enforcement, etc., along with auditors from state environmental agencies. The Department of Justice might be audited by enforcement divisions of other agencies along with state attorneys and law enforcement.
Elections are another area that needs routine audit. Election officials should know that their work on any election may be randomly chosen for audit even if no one has complained. Additional focused audits can address irregularities. Routine public disclosure of independent-audit results will do much to restore Americans’ faith in our electoral process.
What about the cost auditing? As economists say, TINSTAAFL. Audits cost money and pull expensive personnel away from their regular jobs to do work that provides no obvious productive value. An equally important question is, What is the cost of not auditing? The potential for wasted and misdirected resources in an unaudited agency is huge. Auditing an agency that is in compliance and has well-organized documentation is not a big deal. Auditing an agency that is out of compliance or has poor recordkeeping practices can seem like a quagmire. But it is the the latter agency that has the most to gain from the audit. Selecting random time periods and functions to audit can reduce costs compared to a full audit, while providing a good idea of how well the agency is doing. If no wide-scale systematic problems are found in the random sampling, it is not necessary to perform a full audit.
Program audits can provide the information voters and representatives need to make good decisions. We need routine, publicly-disclosed, program audits of all levels of government starting today.
Posted 2022/04/17