Association of Local Government Auditors

As local government auditors, we are facing increasingly difficult challenges to improve the ethical culture of our organizations, as unethical behavior in our jurisdictions is on the rise.  The Ethics Resource Center's 2007 National Government Ethics Survey (Ethics Survey) reported that government employees are working in environments that are conducive to misconduct and that intervention programs to improve ethical behavior are uncommon.  The Ethics Survey also reported that local governments have the highest incidence of observed misconduct compared to other levels of government.  The Ethics Survey reported that 63 percent of local government employees surveyed observed incidences of ethical misconduct.

The Ethics Survey also found that local government managers are the least likely to know about their ethics risk.  Local governments experience the lowest level of reporting of observed misconduct (67 percent), the highest pressure to commit misconduct (16 percent), and the highest levels of retaliation for those employees who do report (20 percent).

During the 20 months that I have been City Auditor of the City of Oakland (City), the City has had its share of ethical lapses.  Recently, the City

Administrator was fired, as well as the Assistant City Administrator.  In addition, charges of nepotism and favoritism in hiring and promoting employees have been leveled.  Our audit of the City's payroll and compensation practices identified significant internal control weaknesses which allowed a number of significant abuses to occur.

In light of the environment we are now working in, how do we as local government auditors help change the ethics and integrity of our organizations?  This article focuses on the steps I've taken in my 20 months in office as Oakland's elected City Auditor to assist in transforming the ethical culture in Oakland.

First, my office has established a performance audit function that is focused on assessing internal controls and making recommendations to strengthen or implement critical internal controls. Based on our initial audits, the City seems to be lacking in many basic internal controls.  Consistently, our audits have identified a lack of policies and procedures over the work processes we've audited.  In my opinion, the most important internal controls for building a strong ethical culture are having a strong "tone at the top" and enforcing policies and procedures. The Association of Certified Fraud Examiners notes "To set the right tone, those in positions of management have to follow four very important steps: communicate to employees what is expected of them; lead by example; provide a safe mechanism for reporting violations; and reward integrity."

Second, I believe auditors must lead in establishing a culture of accountability, integrity, and transparency. Therefore, next to establishing a performance auditing program, my biggest priority has been to establish a whistleblower program that has the full backing of the City's elected leaders. Accordingly, I developed a whistleblower ordinance for the City Council to approve.  I wanted to send a clear message to the employees and the citizens of Oakland that the leadership of the City encourages whistleblowers to come forward and that any retaliation against whistleblowers will not be tolerated. The City Council approved the whistleblower ordinance in July 2008.

Finally, in partnership with the City's elected City Attorney, I have sponsored a reform package for the City Council's consideration.   This package includes a whistleblower hotline (which the Council has already approved), an ethics audit, and ethics training for all employees.  If approved, these programs should assist employees in doing the right thing and provide a strong deterrent for employees that may be tempted to do the wrong thing.

In conclusion, the public's faith in the integrity of its government is essential in a democracy.  When the public loses confidence in its government, it erodes the public's support to provide the resources necessary to deliver essential services.  Local government auditors can lead their jurisdictions in establishing effective programs for establishing a culture which reinforces a shared concern for ethics and provides support for employees who want to do the right thing - every time.  Our profession must champion restored integrity in our jurisdictions and vigilantly fight to keep it intact.