The recent news that the Tucson Unified School District put six employees on administrative leave after years of alleged property theft reinforces the longstanding argument for establishing an internal auditor in TUSD.
TUSD's board-appointed audit committee has warned of inadequate property controls since 2008, when it formally recommended that TUSD hire an internal auditor to help prevent "lost assets," "procurement improprieties," etc. The committee restated its position last March: "The audit committee unanimously recommends that the Governing Board re-establish an internal audit staff … (which would) report directly to the Governing Board and be part of the board office staff."
An external management audit made the same recommendation five years ago. MGT of America observed: "Internal auditors provide insight into the reliability and integrity of information; review an organization's compliance with laws, rules, and regulations; and encourage the efficient use of resources. … The cost of an internal auditor is generally more than offset by savings generated through improved efficiencies." MGT recommended that TUSD "hire an internal auditor who reports to the TUSD Governing Board through the audit committee."
The Texas State Auditor's Office recommends that all but the smallest school districts have an internal auditor, and New York State requires them to have an internal auditor who reports directly to the Governing Board.
The TUSD board will consider the creation of an internal auditor on June 25. Board member Michael Hicks and I have submitted a proposal incorporating elements of New York's statute and the various recommendations that TUSD has received.
For auditors, independence is always a critical issue. That is why the internal auditor should report directly to the board, TUSD's highest authority. The U.S. Government Accountability Office's manual of Government Auditing Standards states that an internal auditor is sufficiently independent if he or she is "appointed by, accountable to, reports to and can only be removed by a statutorily created governing body, the majority of whose members are independently elected."
Recent revelations concerning the chancellor and superintendents of Pima Community College, the Sunnyside school district and the Arizona State Schools for the Deaf and the Blind make it clear that the internal auditor should not be beholden to the chief executive officer, whatever the title.
Moreover, the public perception of independence may be as important as the independence itself. An internal auditor who works directly for the superintendent or chief financial officer cannot credibly clear them of suspicions of impropriety.
The most difficult situation for an internal auditor would be corruption on the board itself, but allowing the auditor to report concerns about individual board members to the board's audit committee or to other (untainted) board members provides some level of protection.
There is no evidence that the Governing Board would over-manage the internal auditor. I have never seen the board give explicit direction to TUSD's audit committee, threaten its independence or interfere with its operations. The audit committee's members are unpaid volunteers, however, and most of them have full-time jobs. They can oversee but not substitute for a full-time internal auditor.
Rebuilding confidence in TUSD requires not only higher student achievement but also clear demonstrations that the district is making better use of resources. Hiring an internal auditor and maximizing that person's independence would send a strong signal that TUSD has nothing to hide and is committed to efficiency and transparency.
Mark Stegeman is a member of the TUSD Governing Board. Contact him at email@example.com