Straight Talk Q&A: City Auditor Laura Doud
From Issue: Volume XXI - Number 2
Art Levine’s guest for the recent Straight Talk show was City Auditor Laura Doud.
Art: You’ve been in office as our elected city auditor in the City of Long Beach for six years. Tell the folks what the City Auditor does.
Laura: As you mentioned, the city auditor is an elected position, citywide, and it’s my job to represent the taxpayers, to independently look out for their best interests. We look at the city’s departments to find ways of improving efficiencies and effectiveness, to try to help their operations. Some people refer to us as the taxpayers’ watchdog to ensure that taxpayer’s money is being spent appropriately and wisely, and I think one of the benefits of being an elected city auditor is that I make the decision on what audits we perform. It’s not according to any other City Hall agenda. We have the power and the authority to audit any office, department, agency, etc., and we make the decision on what needs to be looked at.
Art: Let me just highlight the fact what Laura just mentioned that Long Beach is one of the few cities where the city auditor is elected by you, the people, as opposed to being appointed by the council. That gives you a degree of independence, which is quite special.
Laura: Yes, it does. So it’s really... It gives us a lot of latitude and a lot of flexibility and a lot of authority, and our job is to try to make the city better.
Art: And as you’ve mentioned before, you work for the people.
Laura: That’s right. If you look at the city’s organizational chart, you can see that there’s one line up above the city auditor, and that’s the residents of Long Beach.
Art: You have been peer reviewed and this answers the age old question of who is watching the watchdog? Well, the answer is peer reviews.
Laura: There is that question about who audits the auditors, and so we are required as a government auditing office to undergo a peer review by auditors throughout the country to ensure that we’re in compliance with the standards. So, just as we require other departments to open themselves up for audits, to promote accountability and transparency, we open ourselves up to an audit. We’re required to do it every three years. So in the six years, we’ve had two peer reviews and we’ve passed both of them, and I think it’s great for the public to know that their auditor’s office is in compliance.
Art: One of the most publicized recent audits resulted in the arrest of and conviction of a former Animal Control employee. Tell us about that.
Laura: Yes, there was an employee at the Animal Control Bureau who did embezzle more than $250,000, and the way that she was able to do that was she was the only employee with control over the cash from the point of collecting the cash. You learn in Accounting 101 that you have segregation of duties that the person who collects it doesn’t make the deposit, and she was also performing the reconciliation. So it was only recently that they implemented an electronic system where they could track. When that electronic system was in place they were able to track the money that came in. It did not match the money that was deposited.
Art: Can you provide assurance that today that every other department is not making that same mistake?
Laura: I can’t provide absolute assurance, but we’re keeping a watch. We’re getting aggressive. We’re going after every department where there’s risk. We go after the highest risk first where the most money is available so we know the money is being captured in the city treasury.
Art: A couple of the other audits that your office completed were with the water and sewer rate increase. Tell us about that.
Laura: This was in response to some public questions and concerns about why their water rates were increasing. So we did a high level overview of the water department. We didn’t do a really in-depth audit, but we looked at their budgeting process, and we looked at what drove, or what drives water rates and sewer rates, and so it really stems from their budgeting process, and what we found is that their water rates and their budgeting process basically stemmed from their budgeting of huge capital improvement projects that weren’t being done, and so, year after year they would continue to budget for these projects and that would drive the rates. In 2009 there was a 15% increase and in 2010 a 16% increase.
Art: In water rates.
Laura: In water rates. For the years 2009 to 2011 the sewer rates increased 56%. Okay, so while these water rates increased because the projects were not getting done, their reserves continued to grow. So the department’s policy is to maintain a $6 million reserve, but we found at the end of our audit period, 2011, their reserves were at $43 million, on target for $48 million in fiscal year ‘12. So their response was, “Well, you know there are problems, there are a lot of problems with capital projects. We agree with that, but the problem was they weren’t factoring in those problems when they were setting their budget.
Art: The water department months earlier indicated that they had a record low of outages and sewer breaks and the like and water main breaks, which is a good thing because of a very aggressive repair program. But in this case you’re suggesting that maybe some of those rates should not have been increased because the projects which earlier rates had been increased to never got built, and the money was sitting there.
Laura: Right. And so their budgets were reflecting that they would have a shortfall. In reality they would have a large surplus. They’re doing good things, but we are recommending that they do a little bit better in their budgeting.
Art: The parking citation collection process was really shocking. There are unpaid parking citations three years or less outstanding of $17.5 million. Now that’s over 100 cops. You would think that the city should be able to collect parking violations, particularly recent ones.
Laura: Yes, that’s right, but as we dug a little deeper, we found, again, that the system was out of date. There’s been a pattern from some of the audits we looked at that the city has outdated systems. So what’s happening is that the city is using an enormous amount of staff resources to do by hand what can be done electronically, and so our recommendation for this particular audit was we need a new system. They’re doing the best they could with this system that they had, but it’s outdated. It’s unreliable. We can’t track who the owner is to pay these tickets. It didn’t interface with the DMV. So the good news in all of this is that we made a recommendation to the council to give city management the money, the investment for a new system so we can get the money. It’ll be a good return, and they did approve it.
Art: You present the results of these audits to the City Council as a courtesy. You’re not legally required to do that, but besides doing the audit, and obviously you meet with the department impacted before you even release the report as you were mentioning to me before we went on air, but you in addition make these presentations to the City Council with the result of your audit, and you also ask for an action date, six months out usually.
Laura: There’s a purpose to our audits, and it’s to make change, and it’s to improve, to become more efficient. So our audits always have a spot at the end to come back to the city auditor and to the City Council and to the public for that matter and let us know the progress of what you’ve done to implement our recommendations.
Art: That’s great, and in these tough budgetary times, what you’re doing is particularly... it’s important any time. You don’t want to waste money, but particularly where we’re cutting police officers, we’re cutting libraries, we’re cutting parks, to leave money on the table is unacceptable.
Laura: Yes, absolutely. So we need to be smart about the way we’re operating.
Art: The week of November 12 was National Fraud Awareness Week, and you took that opportunity to avail... unveil your renewed fraud hotline. Tell us about that.
Laura: We would like the public to know that we do have a 24-hour fraud hotline that we have revitalized for the public to call, 888-FRAUD07, and they have the opportunity to report suspected fraud abuse, waste of any city fraud, and it’s anonymous. So they can call this 24 hours a day, 7 days a week. It’s all anonymous, and we will follow up on it, but, again, at this time we do need to stop all fraud, waste, and abuse as city services, and we hope that people will be alert and open and think about reporting this when we see this because it’s a very important thing that affects all of us. It affects the citizens. It affects the city. It affects morale. We know majority of the employees are good employees. They want to do what’s right. It’s just the small few that aren’t doing the right thing.
Art: Let’s spend a few minutes up close and personal with you. You’ve been city auditor now for six years. You’re a graduate of Long Beach State, and give us just your personal reaction to holding this office for the six years that you have.
Laura: Well, thank you. Thank you. I’ve loved it. It’s been a great six years, I think probably one of quickest six years of my life. This is a huge city. This is my home town, where I was born, where I went to school, and I love this city, and I care about it, and there’s a lot of room for improvement, and it’s great to feel like you’re making a little bit of a difference.
Laura: To help improve. So in that regard it’s been very rewarding. I also have a greater appreciation for what it takes to run a city, and there are a lot of, you know, a lot of big things, and so we’re doing the best we can. I think we have a wonderful mayor and council and management that are working really hard, and it’s great to work together as a team to try to make this city the really best it can be.
Art: I think we’re very fortunate in Long Beach to have an independently elected city auditor. and you have 30 seconds to say whatever you’d like.
Laura: Well, thank you. Thank you so much for having me, and I appreciate this opportunity to get out to the public our message that we are there to serve them, and we have a website that people can go to visit and contact us. We want to know what’s on their minds. How are we doing? How can we do better? How can we be better as a city? What ideas do they have for what audits we can do and what we can do to better serve them? So it’s really a privilege to serve the community, and I appreciate this opportunity. Thank you.
Straight Talk airs in Long Beach and 40 surrounding cities on Saturdays and Sundays at 9 a.m. and 7 p.m. on LBTV Channel 3 and FiOS 21, and at 10 a.m. and 8 p.m. on Charter Channel 101.
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