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School districts, auditors, and accountability

By Ann-Marie Hogan
Monday September 17, 2001

Berkeley’s school district is threatened with “negative certification” because of budget inaccuracies; Emeryville School Board directors are recalled, after reports of deficit spending and inappropriate expenditures by the Superintendent; Peralta District students start school without textbooks. Students, parents, teachers and taxpayers can’t help wondering “why can’t they get it right?”  

As the daughter of a California elementary school teacher, I’ve watched the damage that’s been done to our state’s educational system by inadequate funding, the increasing challenges of educating today’s students, and state and federal “unfunded mandates.” 

As a city department director and elected official, I’ve learned that accomplishing the most basic tasks of administration in a public sector environment requires a struggle with forces, systems, and policies that appear mysterious if not downright irrational from a business perspective. As a member of the National Association of Local Government Auditors, I’ll state the obvious, from the auditors’ perspective: local school systems need an independent performance audit function.  

Most cities of Berkeley’s size and larger, and many school districts, include a performance audit function, according to Mark Funkhouser, city auditor for Kansas City, in “The Spread of Performance Auditing in American Cities.” This internal performance audit function is in addition to undergoing an annual financial audit from an outside contractor/accounting firm. The annual financial audits take a broad look at whether the numbers in the financial statements are accurate. Performance auditing, in contrast, speaks to classic problems in public administration: efficiency, effectiveness, and equity in the delivery and administration of programs and services.  

An independent performance audit provides an objective and systematic examination of evidence in order to prepare an independent assessment of management’s performance. By audit standards (set by the U.S. Comptroller General), the agency’s auditor must be independent of the administration, reporting to the legislative body (city council or school board) or directly to the public (elected). This ensures that honest and forthright reports are provided to the public, and to those with the authority to implement the changes.  

How can an independent performance audit function improve a school district’s efficiency and accountability? By identifying problems and making recommendations resulting in improvement in service delivery, cost savings, and improved accountability.  

BUSD: A performance auditor could review budget estimates, follow up reports on systems weaknesses identified in the annual financial audit, evaluate the computer systems, and examine recruiting and retention of qualified staff. (See Departmental Budget Monitoring report on the City Auditor’s website)  

Emeryville: Not only budget deficits but reports of inappropriate expenditures were discovered too late. An annual financial audit can’t be expected to uncover details about expenses, and is typically completed substantially after the end of the fiscal year. An independent internal reviewer was clearly needed to surface the problems without censorship before it was too late to take action.  

Peralta: Delays in obtaining textbooks and supplies are a chronic problem in schools. Independent performance audits of purchasing practices are the best solutions.  

A competent and independent audit function in every school district won’t solve all the school district’s problems. But, without an objective and careful ongoing evaluation of an organization’s internal controls and operational effectiveness, school boards will not have the information they need to make the difficult decisions needed for real improvement.  

The key to a successful audit program is the willingness and capacity of responsible officials to support ongoing independent evaluation, and to take action to make agreed-upon changes. Auditors, elected officials, and operating management can work together to address problems before they become crises in our school districts, just as they do in cities and other districts.  

Questions? Comments? Ideas for the Audit Plan? Please e-mail the City Auditor at, mail to 12180 Milvia Street, 3rd floor, 94704. Audit reports available on line at  

Ann-Marie Hogan is the city auditor for the city of Berkeley.