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City Council presses for still more auditing of Baltimore agencies

Frustrated by a lack of agency-level auditing in Baltimore, City Council members are pressing to change the city's charter to force audits of municipal departments every two years.

City Councilman Eric T. Costello, the bill's lead sponsor, said he believes biennual performance audits — reviews that track such things as how often potholes are filled or restaurant inspections are completed — will improve efficiency in city government.

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"This is about, 'Are we getting the services we're paying for?'" Costello said. His proposed charter amendment, which he submitted in time to be placed on the November ballot, would need approval by the voters. "The focus of this bill is on performance audits," Costello said. "I believe that is the greatest opportunity for cost savings."

The legislation comes as advocates and politicians have pressured the city for years to increase auditing. Four years ago, Baltimore voters required the city to complete both financial and performance audits of 13 key agencies every four years. But despite spending more than $1 million on such auditing, only three have been completed. By law, they must be finished by the end of 2016.

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Costello's bill, as submitted, would require performance audits to be done every two years. He says he plans to amend the proposal to require more frequent financial audits as well.

In addition to requiring audits twice as often, the bill adds three city agencies that must undergo the reviews: Health, Human Services and Employment Development. Agencies already required to undergo auditing include the Department of Public Works, the Police Department and the Fire Department.

The bill also transfers responsibility for completing the audits from the city's finance director, who reports to the mayor, to the city comptroller.

"It's an inherent conflict of interest," Costello said. "If I'm the director of finance and I serve at the pleasure of the mayor, how am I going to oversee audits of the mayor's agencies?"

Eight of 15 City Council members have signed on in support of the bill, which also has the backing of City Comptroller Joan M. Pratt. Mayor Stephanie Rawlings-Blake has yet to take a position. A hearing on the bill is scheduled for 10 a.m. Tuesday.

Pratt called the legislation "great" but said she needs more money to complete the audits.

"We must have adequate funding to hire staff to perform these audits," Pratt said. "We are looking forward to hiring accountants to do these audits and have them completed timely."

Pratt said she believed auditing agencies every two years would be a better use of city revenue than analyzing four-year-old budget data, as the current law requires. "How useful is that financial information? It's not useful at all," she said.

While an audit is performed each year of the city's overall budget, more exhaustive audits of individual agencies have been far rarer. During the Democratic primary for mayor this year, several candidates made increasing auditing a central part of their platforms — arguing that some agencies hadn't been audited in decades.

Financial audits of agencies have proved difficult to complete, city officials have said, because detailed books are kept by the Finance Department, not at the agency level.

"The Department of Finance has had to re-create these books by individual agencies," Costello said. "That has been a very labor-intensive process."

The first of the agency-level audits completed under the charter amendment found the Department of Transportation did not keep sufficient records to track how well workers are doing their jobs. The review also found the agency annually submitted erroneous information for the city's budget.

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Audits of the finance department found its financial statements were "free from material misstatement," but the agency did not perform business inspections in an "efficient or effective" manner and failed to maintain records to show whether employees show up for work.

City Council members Sharon Green Middleton and Brandon Scott are among those who have signed on as co-sponsors of Costello's legislation.

Middleton said problems with timely auditing have been "a concern with the citizens of this city."

"Transparency is a very important issue with every agency," she said. "If there's a way for audits to be done every two years, I'm for it."

Scott said he backs the bill but wants to make sure the city provides enough money to complete the auditing.

"It's frustrating," he said of waiting for audits to be completed. "But it also highlights the fact that we have to make sure the resources are there."

Costello said he doesn't believe his bill will cost significantly more than the current process. He said he's proposing to change the way city officials conduct their financial audits. He wants to focus narrowly on receipts and expenditures rather than analyzing other financial information he argues is time-consuming to review and not germane to the agency.

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