Independent audits badly needed at UC
The regents of the University of California should make sure that the system-wide audit office they oversee focuses on auditing the Office of the President rather than providing support services to management. A strong and independent audit organization that follows the Government Accountability Office’s government auditing standards would:
Be fully independent of President Janet Napolitano’s office.
Increase transparency and public trust.
Strengthen UC’s efficiency, effectiveness and equity in delivering services.
The UC Board of Regents must take ownership of its own audit committee responsibilities and provide the resources and guidance needed to maintain a robust, independent audit function.
State Auditor Elaine Howle is spot-on in recommending that the UC regents adopt a formal reserves policy and increase budget transparency. Napolitano has wisely agreed to implement these important recommendations. But what is still missing?
How the regents can improve their governance of the statewide university system without relying on the state auditor.
The regents, through their Audit and Compliance Committee chaired by Regent Charlene Zettel, must ensure that the audit staff they appoint is focused on auditing UC management. As a public institution, the university should require GAO’s Generally Accepted Government Auditing Standards — standards followed by the state auditor and by city auditors in San Jose, Palo Alto, Berkeley, Sacramento, Oakland, Long Beach and San Francisco. This would ensure the credibility of the audits and the independence of the auditors. It would also reduce “non-audit services” performed by auditors following standards from the Institute of Internal Auditors, the current practice.
The GAO’s standards make clear that institute standards should be used only by internal auditors — those appointed and overseen by management — as in the corporate world. The GAO considers internal auditors as lacking the independence needed for public reporting, especially if they perform management functions, as is currently the case. Even corporate auditors, since the Enron debacle, now are required to increase the oversight of audits by the board of directors’ independent audit committee. As a public institution, UC needs to go further to ensure independence.
The auditors must have the standards and support to identify risks, robustly audit the UC Office of the President and speak truth to power. The audit committee can also help increase auditor independence and audit visibility by monitoring implementation of recommendations and making reports easy to find on its website.
Citizens, as strong supporters of public education and as taxpayers, should let the regents and our state legislators know that the UC Board of Regents needs to step up to the plate as steward of our public trust.