My name is Lee Powell and I am the chair of the Augusta Charter Review Committee Finance Subcommittee. I have been researching the audit process for a while now and certainly do not intend to call myself an expert (although I have gained a considerable amount of knowledge about the audit process).
It is my firm belief that had an internal audit process had been in place within the Augusta government within the last five to 10 years, Augusta would not be having two external audits being conducted at this point. Our subcommittee has proposed an independent Internal Audit Department within the Augusta government to begin to restore the trust between the citizens of Augusta and its government.
Here is the beginning of that charter change recommendation:
It is essential to the proper administration and operation of the Augusta government that public officials, government managers and private citizens know not only whether government funds are handled properly and in compliance with laws and regulations but also whether public programs are achieving the purposes for which they were authorized, funded and that they are doing so efficiently, effectively, and equitably.
An independent internal audit department can provide objective information on the operations of government programs, assist managers in carrying out their responsibilities, and help ensure full transparency and accountability to the public.
Internal auditing is defined as an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.
Some of our colleagues on the Finance Subcommittee offered suggestions, such as requiring the department be funded annually and the creation of an independent Audit Oversight Committee. Both of these additions are designed to ensure that audits are carried out within the Augusta government without interference from politics from inside or outside of the government.
There are many types of audits used depending on the type of information output required. The audits that are most common are performance and/or financial audits. An example would be when a municipality receives a grant from the Federal Government. The grant documents (called Grant Assurances) are subject to audit.
Augusta is now in the process of a grant audit on monies disbursed to Housing and Community Development (HCD) and is waiting on the results at this point. When an audit is considered for a department that receives Federal grants, only 20% of the grants awarded are audited randomly (unless there have been issues with grants in the past). If there were issues in past grant audits, then 40% of received grants are then audited. At this point, this is where Augusta is. Forty percent of the HCD grants are being audited.
Augusta has a second audit in progress. The Recreation Department has an audit with specific areas and dates to be audited.
In the not so distant past we had two Commissioners, Commissioner Catherine Smith-Rice and the late Commissioner John Clarke, repeatedly asked for an audit of the Recreation Department and were unsuccessful. The two commissioners did not get enough votes to authorize that audit as some commissioners did not want to accuse a sitting department head of any wrong doing.
Each year a required audit of the year-end City of Augusta financial position is conducted by an outside accounting firm. This audit is required by state law and must be posted with the state no later than 180 days after the end of the financial year. In Augusta that is Dec. 31, the end of the fiscal calendar. So the yearly audit has (again by state law) to be transmitted to the State Auditor by June 30 of each year. Augusta has asked the state for and received an extension this year until the end of 2025 due to two audits in-progress in Recreation and HCD.
It is important for citizens to understand an auditing reality — auditors don’t audit every dollar. External financial statement audits are procedural and sample-based. They obtain “reasonable assurance” (an industry euphemism for ‘clean’ rating) through risk assessment, materiality thresholds, tests of controls and substantive samples of transactions and balances. They will not examine every invoice, check or journal entry.
Another important fact citizens need to be aware of is that ‘forensic audits’ are typically only utilized by the FBI/GBI and other enforcement agencies. In those scenarios, they come in, close down the entity being forensically audited and may present findings (…or not if they’re part of an ongoing investigation). Typical triggers for forensic audits in Georgia local governments include:
- Suspected embezzlement, fraud or misappropriation of funds;
- Large unexplained budget shortfalls or accounting irregularities
- High-profile questionable spending (p-card, travel, contracts)
- Political disputes where elected officials or residents demand deeper review than a routine financial audit covers.
The Charter Review Committee hopes voters will endorse our efforts to tighten accountability of our tax dollars through these audit measures. Additionally, stringent requirements are being considered in a new addition to our charter through a proposed “Ethics and Accountability” section. These ethics provisions will appear in the coming weeks to explain the need for and requirements of this provision.
Finally, even the best of Charters rely upon an informed and active citizenry monitoring and engaging with our elected officials. You can review the City of Augusta’s financials at:
click: Departments…Finance…Financial Statements
-Lee Powell, chair of the Augusta Charter Review Committee Finance Subcommittee
