Kate’s Audit “Success”

The Truth About Kate Brown’s Audit “Success”

“The state of Oregon has a auditing shortfall…Internal auditing is critical to good government. It is not good enough for Oregon to make laws requiring internal audits. I must also get them done.” Bend Bulletin Editorial, 1/7/2012

In her first TV spot, Kate Brown is hanging her hat on her success as an auditor. But has she really been that successful?

After a typical partisan attack on Knute Buehler for being a Republican, Brown’s spot brags about her audit success. Take a look at what the TV spot doesn’t tell the viewer:

“Stretching-The-Truth” Audits

Kate Brown continues to brag about all the money she’s found via an audit of the Department of Revenue. But close examination reveals that while she might have found it, actual savings are not being realized.

A 2010 Department of Revenue audit served as the primary source for an Oct. 15, 2011 POLITIFACT where they ruled as TRUE the statement that “every dollar the state spent on audits last year, it delivered $64 in cost savings.” This is a claim that Kate Brown and her surrogates continue to echo. In fact, they’ve upped their ante to $180 million in savings from audits according to her TV spot and an article in the Statesman Journal: “Lawler said the estimated savings top $180 million…” He used it in an email attacking Knute Buehler as well.

But a follow-up report from August 2011 says that actual collection rates are far below what was originally estimated. Brown estimated 50 percent, when in fact the collection rate has been a mere seven percent. Has Brown adjusted her bragging? Clearly not.

“Kate-Come-Lately” Audits

Some of the best investigation of audits in Oregon hasn’t even been done by Kate Brown. Prominent audit reviews by the press or others have shined the light on problems before Kate Brown ever did. These include:

Mount Hood Community College

Two years in a row, MHCC received management letters telling the college to fix issues with payroll transactions. Yet the Secretary of State did no follow-up. Why did it take a board member calling for an investigation to get Kate Brown’s attention? Why didn’t the Secretary of State pay attention to this issue TWO YEARS ago when the independent auditor identified it? At the least, the second appearance of this problem in a management letter should have provoked additional inquiry from Kate Brown’s office.

Commission on the Blind

Kate Brown took credit for over 15 years of work by other Secretaries of State in September of 2011, and continues to in her campaign. Brown’s work has been routine follow-up on audits that began before she took office. Yet, in an email to supporters, her campaign bragged that she “Uncovered substantial mismanagement at the Commission for the Blind”. So much for the work of Secretaries Bradbury and Keisling. According to Kate Brown, it was all her!

“Flat-Out-Missed-It” Audits

City of Molalla

It took a private fiscal auditor, hired by the city themselves, to uncover all of the financial mis-managment at the City of Molalla. The Oregonian and other local news splashed the findings all over the press. But nothing from Kate Brown’s Office.

Red flags abound in the past two audits for Molalla, each over 100 pages long. Now, the city faces massive deficits, which might have been avoided had Kate Brown not let the audits sit on the shelf.

CIty of Ontario

The city’s 2010 audit was full of deficiencies and red flags. One city council member was so concerned, he asked the Secretary of State’s office to follow up. Kate Brown did nothing.

“AWOL” Audits

In addition, Kate Brown has let several state agencies slip with regard to even filing an audit. These agencies include:

• Education
• State Lands
• Agriculture
• Community Colleges and Workforce Development
• Fish and Wildlife
• Veterans Affairs

Finally, dozens upon dozens of local municipalities have failed to file their required audit information. According to the below chart dated July 2, 2012 from the Secretary of State’s office, over 60 municipalities are delinquent in their audit filings. Aside from creating a chart, what has Kate Brown done to bring these governments into compliance?

What Could Kate Do?

Two excuses often used by the Secretary of State for these audit failures are that the Audit Division does not have adequate resources and that the Secretary of State does not have any way to enforce audits.  Both are false.

The Secretary of State could have hired an additional auditor.  Instead, she chose to hire a social media manager to the Secretary of State’s office, just prior to the start of the election season.  Instead of being so concerned with what her Facebook and Twitter accounts are posting, she should be concerned with the lack of audits being done.

The Secretary of State has statutorily granted powers to make sure audit recommendations are implemented. As far as we know, these powerful tools have never been used by the current Secretary of State:

• ORS 293.515 gives the Secretary of State the power to recommend the Governor withhold pay from state officials or employees who fail to correct delinquencies or errors in audit findings.
• ORS 297.466 gives the Secretary of State the power to withhold 10 percent of monies to be distributed to municipal corporations that fail to correct audit deficiencies.
• ORS 297.990 forces county commissioners and executive officers of municipal corporations to forfeit their pay for failing to correct audit deficiencies.