Supervisors Vote to Eliminate Audit Department, Hire Outside Contractor

Auditors had questioned the wisdom of the move, saying it would undermine the independence of future audits.

Members of the Prince William Board of County Supervisors voted on Tuesday to scrap the county's internal auditing department and hire an outside contractor to do the bulk of future work. 

The supervisors voted 6-1 in favor of the move to outsource the work to a national firm, McGladrey, and maintain just one staff member to oversee the outside auditors. Audits will be approved by the Board on a case-by-case basis, which the supervisors expect to save the county money. 

The move had stirred up some controversy this week, after the Washington Post published a memo from the audit department early this week that was critical of the move. The decision comes at the same time as the supervisors discuss ideas on how to cut millions from the county budget. 

The auditors—who just a few years ago helped uncover millions of dollars worth of criminal fraud by members of the county's IT department—pushed back against the idea of eliminating the department. They wrote that privatization would lead to loss of institutional knowledge and a contractor would be less independent. 

The auditors also wrote that since the contractor had been tasked with developing an audit plan and looking at risk assessment, there was at least the appearance of a conflict of interest in hiring the firm. 

"A consequence of tasking the contractor with this type of responsibility is that the contractor would be proposing their own work to be performed under the contract...The taxpayers and the BOCS could continually question whether audits are proposed by the contractor for reasons of highest risk or other valid criteria or whether they were chose for self-serving reasons," the memo read

Chairman Corey Stewart said at the meeting that an outside contractor would report to the BOCS audit committee and would retain independence. 

“We are not getting rid of internal audit," said Stewart. "We will be spending just as much money on internal audit as we did in the past. We will continue to have an internal auditor, but they will have at their disposal the Board auditing committees, one of the best auditing firms in the country, McGladrey."

Stewart characterized the county department's work on some of the recent audits as unsatisfactory and incomplete.

Woodbridge Supervisor Frank Principi, the dissenting vote, said that while McGladrey is a reputable firm, he did not equate privatization with independence and wanted more information. 

“Once we push this button and we make this decision as a Board, who is that director of the audit function beginning tomorrow morning, or tonight?" Principi asked. "Who is that person and who does that person report to?”

Stewart then referred Principi to the McGladrey website

Brenda Turner December 01, 2012 at 03:03 AM
If you are spending the same amount of money using a contractor as having an internal audit department, then where are the savings? And further, if the BOCS will approve audits on a case-by-case basis, where is the independence?


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