I was encouraged by Utah State Auditor John Dougall’s observation that, “It’s hard to fix stupid,” and that he thus has “a lack of confidence” in Utah County lawmakers, as reported recently in The Salt Lake Tribune, and he called Uintah County the “epicenter of financial dysfunction.”
In his role as watchdog over local governments’ fiscal accountability in the state, I endorse his call to amend a state law (Senate Bill 124) that in 2012 allowed county commissions to make such controversial amendments to the duties and powers of county auditors. I was encouraged that Political Subdivisions Interim Committee chair, state Sen. Michael McKell, supports drafting a bill addressing Dougall’s concerns in the upcoming legislative session.
At the time of passage of SB124, I was the director of the Audit Division of the Salt Lake County Auditor’s office. I wrote a 2012 Salt Lake Tribune commentary — “A bill that invites fraud and abuse” — to contest this bill and appeared before Sen. Curt Bramble’s Revenue and Taxation Committee. I testified that historically the Utah Legislature had mandated the separation of powers between auditors and county governing bodies. Senate Bill 124 granted authority for every county governing body to exercise exclusive powers over budgeting, including designating the “budget officer” as the county commission, the county executive or the council, depending on a county’s form of government, in all Utah counties. An amendment changed this to apply to only counties of the 1st class. (Salt Lake County held the sole distinction at the time.)
In prior years, elected county auditors were, by statute, the “budget officer” charged with setting a tentative budget for submission to the county executive and legislative bodies for proposed changes and adoption. The auditor also monitored budget expenditures each year and performed accounting functions to produce the Consolidated Annual Financial Report for outside audit review.
The bill also allowed county councils or commissions to delegate “an accounting service” to the county executive or an elected office or department “in accordance with good management practice.” This power provided wide latitude to county executives to control accounting practices. Finally, the bill allowed auditors to conduct performance audits, but only under supervision of the county legislative body or county executive, a provision that could impede the independence and objectivity of auditors. Again, these provisions applied only to counties of the 1st class. These provisions essentially stripped away the most important powers and duties of the Salt Lake County Auditor’s office. This proved to eventually become reality in Salt Lake County.
Studies by the Association of Fraud Examiners and others conclude that three factors, often referred to as the “Fraud Triangle,” facilitate fraud and abuse:
• Pressure: Elected officials may feel significant pressure from political allies, campaign contributors and constituents to make good on their pledges, or county employees may face financial pressures beyond their means.
• Opportunity: The opportunity to misuse public funds is enhanced where internal controls are weak or easily overridden, where roles are unclear, and powers and duties are not separated. The separation of powers between the auditors and county executives was designed to safeguard the abuse of executive power.
• Rationalization: Elected officials are often in a continual, time-consuming effort to raise campaign funds. Their compensation may be disproportionately low when compared to the time and effort to get elected and the demands of the office. So, rationalizing a misuse of funds becomes easier.
So, I applaud the candid observations of the state auditor regarding the efforts of county elected officials to follow the path created by the ill-conceived SB124. Checks and balances are the hallmark of transparent and accountable government.
Jim Wightman is retired but remains involved in trying to influence policy makers at all levels of government.