State audits of local government few and far between
MUNCIE — State audits of local government, historically an important means of discovering costly financial mistakes or wrongdoing by officials, have been dramatically cut back in Indiana.
The State Board of Accounts formerly audited cities and counties each year and school corporations every two years, but now, thanks to a change in state law, SBOA conducts audits only every four years — or earlier if certain red flags go up.
"Now it's based on risk," Todd Caldwell, director of audit services for the SBOA, told The Star Press.
The FBI is conducting an investigation of potential wrongdoing in city government, but the kind of oversight provided over the decades by the SBOA is a thing of the past: The city of Muncie and Delaware County government have not been audited for three years, local officials confirmed this week.
"The statute on frequency of audits changed last year from annual or biannual to a risk-based approach," Caldwell said. "The longest length of time between (examiners) being somewhere is four years."
The state's 194 field examiners are routinely at work in all 92 Indiana counties. In Delaware County, the SBOA has a permanent office in the Delaware County Building, where it shares office space with the county coroner.
But with the number of cities, towns, counties, schools and other entities to examine, limitations on SBOA's budget means "a lot of work and not enough hands is part of the issue," Caldwell said.
An audit of Muncie Community Schools, covering a period from mid-2013 to mid-2015, was released earlier this month. But other large taxpayer-funded entities, including Muncie city government and Delaware County government, haven't been audited since 2013.
State audits are important because, besides finding issues that governments can correct, they can uncover and document misfeasance and malfeasance. In recent years, SBOA audits have found problems with the finances of the Muncie Sanitary District — cited in a special investigation report released in January 2015 for change orders that increased the cost of projects by as much as 96 percent — and then-Delaware County Treasurer John Dorer, who resigned in February 2015 after pleading guilty to one of 47 criminal charges prosecutors filed against him over the mishandling of funds.
Although the state's audits are much fewer and farther between than they were just a few years ago, the SBOA can step in if budgets and spending reports submitted to the state by government entities have irregularities.
Caldwell said the state takes into accounts risk factors, including new and untested elected officials, as well as figures submitted by fiscal officers of governments and schools through the state's Gateway budget and spending reporting system.
And the state can send in auditors if a local official or private citizen see something wrong.
"If they think someone has been stealing, they're required to contact us," Caldwell said about a fiscal officer. "In case of a theft, we'll go in right away.
"Calls from citizens would increase our risk factor or we would go in right away," Caldwell said.
Asked when local governments in Muncie would be audited, Caldwell said, "It's safe to say Muncie would be sometime this year, but I don't know if it will be next week or this fall."
Contact Keith Roysdon at 765-213-5828 and follow him on Facebook and Twitter.