Activist
Te
in
Sate
A New
Auditor:
and
Loa
Player
Politics
"Theseproblemsshould not be tolerated.Organizations
authorizedto sponsor gamblinghave a responsibilityto
managetheirgamesin a business-likemannerand establish sound financialcontrols.The statehas a responsibility to ensurethe integrityof the games and make certain
thatnet profitsare used only for lawfulpurposes.Neither
the sponsoringorganizationsnor the state have fulfilled
theirresponsibilities."
(Minnesota,1990,p. x)
"TheYouthCenterhas been poorlymanaged.Staffat
all
levels have not been held accountable for their
Edward
M.Wheat,
of Southern
University
Mississippi
actions,and some staff have been negligentin carrying
out theirduties.YouthCentermanagementwas awareof
such problems,but did not alwaysact or acted inconsisWhat is the role of the government auditor in today's public
tently or outside established channels. Departmentof
administration? Professor Wheat discusses the dramatic
Social and RehabilitationServices' officials also were
emergence ofperformance auditing and the activist auditor
aware of such problems,but did not act to ensure that
as centralfeatures of American government at all levels. After theywere resolvedand corrected.The lackof
good manreviewing various factors that have led to the widespread
agementhas lessened the overalllevel of securityat the
adoption ofperfornance auditing, Wheat provides examples
Center,endangeringstaff, students, and the public at
large, and has resultedin an atmospherein which staff
of its more "activist"practitioners. Proactive and indepenmoraleis extremelylow."
dent, they are typically willing to go beyond expressed man(Kansas,1989,p. 9)
dates, to initiate
audits, and to issue special reports onfinan-
cial trends. Adherents to "generally accepted government
auditing standards, " activist auditors regard the public as
their "ultimate client."
Wheat concludes by noting the bene-
fits gained by having the "newplayers" on the governmental
scene.
"Inour opinion,the abusesby [theExecutiveDirector]
were in part the consequence of the Board of
Commissioners'
consistentneglect of basic financialand
administrativecontrols. This pattern of neglect has
extendedover the past decade....It is clearlyin the interest of the citizens of Kansas City that the Housing
Authorityoperate efficiently,effectivelyand in compliance with the law. Therefore,the City Councilshould
exercise the means availableto it to improve accountability and control over Authorityactivities. The City
Councilmay also wish to considerproposingto the state
legislaturemodificationsto the oversightstructureof the
Authority."
(KansasCity,1989)
"Therules, regulations,directives,instructions,and
memorandumsthe FamilyAssistanceDivisionuses [sic]
as guidancefor both eligibilityworkersand applicantsor
recipientsare voluminous,contradictory,
and ambiguous.
It appearsthat inconsistentdecisionsare made depending upon which regulationis used in the decision process even thoughthe decisionmaybe in contradiction
of
otherregulationswhich also applyto the situation."
(Tennessee,1990,p. 8)
PublicAdministration
Review* September/October
1991,Vol.51,No.5
385
Are these critical and straightforwardquotations taken
from crusadingnewspapereditorials?Are they the statements
of citizens' organizations,public interest groups, or private
Are they taken fromacademicanalysesproduced
think-tanks?
by professorsinterestedin the theory of organizationstructure and process?No, they are the publishedconclusionsand
recommendationsof performanceaudits undertakenby inhouse government auditors of the city of Kansas City,
Missouri,and the statesof Kansas,Minnesota,and Tennessee.
These are not isolated instances or unusually critical audit
prodreports.They are, rather,examples of the characteristic
uct of an importantnew playerin state and local politics,the
activistauditor.
Two-thirdsof the states as well as many cities, counties,
and special districtsnow have in-house units that regularly
produce audit reportsthat are quite differentfrom traditional
financialpreauditsand postaudits.Stateand local elected officials and public managersincreasinglyconfrontand interact
with governmentauditorsin all phases of the policy and budget processes. Students of public administration,especially
those interestedin policy analysis, executive-legislativerelationships, and administrativeethics, should also find these
developmentsof greatinterest.
The1C
ofperformance
andfunction
discipline
20to
thepast
during
basemerged
auditing
inthe
30yeasaspartofanoverall
shift
to
culture
andadministrative
American
political
stance.
quality-oriented
apostpositivist,
initiatedby an executive or legislativeofficial,depending on
the provisions of the enabling act and the organizational
placementof the auditor'soffice, but almost all performance
auditors have the discretion to initiate audits as well.
Althoughthe immediateformalsuperiorof most performance
auditors and their staffs is a legislative body, performance
audit professionalstend to think of the public as their ultimate client because of the built-inprofessionalinsistenceon
auditindependenceand objectivity(Lee, 1985,p. 16).
A case in point: In 1989 the ProgramEvaluationDivision
of
the Office of the Legislative Auditor of the State of
Althoughthe documents from which the epigraphswere
was directed by the legislatureto undertake an
Minnesota
performance
taken are given various titles-audit report,
of
auditreport,programevaluation-they are all good examples evaluation the "charitablegambling"industry(bingo, pulltabs, etc.) in orderto ascertainhow the proceedswere being
of what professionalgovernmentauditorsincreasinglylabel
used by the sponsoringorganizationsand whether the state
performanceaudits. A performanceaudit may be defined as
controlsover gamblingoperationswere adequateto prevent
on
of
reporting
for
the
purpose
examination
"anindependent
fraudand abuse. The report,issued in January1990, presentthe extent to which a [government]agency is faithfully,effied findingsof widespreadabuse. All but one of the 180 ranciently, and effectivelycarryingout the programsfor which it
domly selected organizations(veterans,educational,religious,
is responsible"(Greathouseand Funkhouser,1987-1988,p.
57). A performanceaudit is conductedaccordingto generally fraternal,civic, and charitable)visited by the auditors had
unlawfullyused some gamblingproceeds in supportof their
accepted auditingstandardsthat are promulgatedby the fedown organizations(Minnesota,1990 p. xii). The report also
eral GeneralAccountingOffice (GAO).This audit is an indefound that state oversight was inadequateand that several
that
pendent third-partyreport of a nonsympatheticnature
potentiallycovers the entire area of operationsof an entity. millions of dollarswere missing from the bank accounts of
the sponsoringorganizations.The executive summaryof the
The scope of a performanceaudit is much broaderthan that
of a traditionalfinancialaudit and may provide information report, from which the first epigraph is taken, pulls no
and analysison any or all of the following:the appropriate- punches;both governmentand the sponsoringorganizations
are held responsible for the policy failure. The Minnesota
ness or inappropriatenessof agency structure;the efficacyof
performance audit report illustrates the independence,
planning,decision making,and personnel procedures;agenstraightforwardlanguage, and normative stance of perforcy compliancewith statutes,ordinances,administrativerules,
mance auditingat its best.
of
the
agency
and
accuracy
orders
decisions;
and judicial
information;the quality of goods and/or services provided;
the efficiency of operations;data comparingagency or program performanceto the performanceof similaragencies or
programsin other jurisdictions;cost-benefitanalysisof public
programsand projects;recommendedperformancestandards;
The discipline and function of performanceauditinghas
suggested policy alternatives;and alternative strategies to
duringthe past 20 to 30 years as partof an overall
emerged
accomplishgoals (Brown and Pethtel, 1988). To satisfyGAO shift in the Americanpoliticaland administrativecultureto a
standards,a performanceaudit must be publishedand made
postpositivist,quality-orientedstance. State and local govavailableto all interestedparties,includingthe generalpublic
ernmentsenteredan era of fiscalconstraintand cutbackman(GeneralAccountingOffice, 1988,pp. 1-2, 7-15).
agement in the late 1970s. The citizenryno longer supports
in
written
plain language, the idea of a general tax increase to fund new public proPerformanceaudits are clearly
grams.Federalaid makes up a progressivelysmallerportion
and use financial and numericaldata only to illustratethe
of state and local budgets. The population of many central
analysisand recommendations.A performanceaudit may be
The Emergenceof
PerformanceAuditing
386
Review * September/October
PublicAdministration
1991,Vol. 51, No. 5
cities has fallen or stabilized,and hence the cities' tax bases
have shrunk. The emphasis now is on careful planning of
specific improvementsand precise targetingof budgetaryand
personnel allocations (Shannon and Kee, 1989, pp. 11-12).
Underthese circumstances,traditionalaccountingauditshave
limited utility to policymakersand public managers.In the
context of cutback management, it becomes increasingly
importantto assess the efficiencyand effectivenessof public
programsand servicedelivery,and this, of course, is the core
purposeof performanceauditing.
Budgetingfor results. Both Chester Newland and Allen
Schick have identified a significantshift toward "budgeting
for results"in industrializednations.Newlandpoints out that
the results orientationhas been evident in the United States
since the 1950s. "Performancebudgeting,productivitymeasurement, PPB, the social indicatorsmovement, MBO, and
program evaluation are intimately related management
approachesin an increasinglydifficultsearchfor government
effectiveness"(1988, p. 63). Schickarguesthat this emphasis
on budgetaryperformanceis coupled with a change in management outlook, which recognizes the need for the decentralizationof decision makingwithin the managementstructure, but also appreciates the need for central office
accountability. "The current emphasis is on making them
manage by nailing down the performancelevels to which
they will be held"(1990, p. 32). Encouragingpublic management to accept performancemeasuresas an ongoing part of
administrativeprocesses is an importantneed in contemporary public administration.Performanceauditing facilitates
this shift by provoking and assisting the development of
internalperformancemeasuresin agencies.The measureswill
then be availablefor effective managementand for use in a
larger context of management accountabilityand effective
budgeting.
Political culture. In addition to the chronic fiscal stress
now afflictingstate and local government,a politicalcultural
dimension of single-issue, mass-media-orientedhyperpluralism has become prominent.As John Nalbandianhas written
with reference to the changing roles of city managers,
"Narrowpoliticalinterestsmediatedby conflict-orientedprocesses spearheaded by not-so-amateurelected leaders produce a context alien to the community-wideperspective..."
(1989, p. 264). The complexityand narrownessof contemporary policy issues, the rise of image-consciousprofessional
politicians,and the increasingsocial diversityof the membership of state legislaturesand city councils, have left a policy
void. City managershave had to change their role from one
with an engineeringand community-widefocus to a "policy
active and brokeringrole"(p. 273). In this fragmentedpolitical context, auditors at both the local and state levels are
strategicallylocated to provide a less interest-orientedand
more system-wideperspectiveon policy performance.
Perhapsthe most significantchange for public administrators at the state and local level is the inescapableideological
shift in the politics and governmentof the UnitedStatesduring the past two decades. Ralph Hummel (1989) describes
The ActivistAuditor:A New Playerin Stateand LocalPolitics
this as a shift from "top-downpositive governmentprogressivism"to "bottom-upmarketoriented populism."Hummel
arguesthat presentadministrative
practicesare inappropriately based on the old New-Deal progressiveideology of positive governmentand that the contemporarypoliticalideological shift requiresa "new administrative
doctrine,"based on a
mix of ideas rangingfromtraditionaladministration
to decentralization,privatization,directfunding,vouchering,networking with the private sector, coproduction, and community
action(see also, Denhardt,1984;Harmon,1980).OrionWhite
and CynthiaJ. McSwain(1990) have noted in a similarvein
is requiredthatrecthata new image of publicadministration
ognizes, among other significantchanges, that public managers are now deeply involved in the day-to-dayadministration of contractswith a varietyof publicand privateagencies.
Performanceauditorsare uniquely situatedvis-a-visthese
shifts in ideology, doctrine,and practice.Performanceauditing looks to the faithful,efficient,and effective performance
of public programs.It focuses on both efficiency(top-down)
and effectiveness(bottom-up).As both LesterSalamon(1981)
and Donald Kettl (1988) have documented, the process of
contracting-outgovernmentservices is becoming increasingly
centralto governmentpracticeat all levels, and this is an area
where the performanceauditorcan help to assure the legitimacy and accountabilityof both the process and the results
of governmentby proxy.
Complexlegal environment.Anotherreason for the emergence of performanceauditingis the increasingcomplexityof
the legal environmentof public administrationin the federal
system.Mostimportantpublic programsat the state and local
level are now undertakenthroughan intricatemix of national, state, and local funding, and programmanagersoperate
within a dense thicketof law and regulationthat would have
seemed unthinkable20 years ago. The 1976 amendmentsto
the Stateand LocalFiscalAssistanceAct were very important
in this regard.The amendmentsincluded stiff audit requirements for any entitywith $25,000or more in annualrevenuesharingentitlements.Such entities were requiredto undergo
an independentaudit.The resultwas a greatimprovementin
auditingskills at both the state and local level (Gary,1988,p.
170). The Single AuditAct of 1984 recognizes and promotes
the increased competence of state and local auditors by
requiringfederal agencies to accept audits of federal programs completed by state and local governmental units
(Brown,1988,p. 10).
In the 1970sand 1980s,individualcitizens,public employees, public employee unions, and public interest groups
became more litigious,partlyin response to new judicialrulings that have radicallychanged the legal liabilityof elected
and administrative officials at all levels of government
(Rosenbloomwith Goldman,1989, pp. 22-28).The increasing
saliency of performanceauditing,with its built-insensitivity
to faithful official compliance with the rules, ordinances,
and/or statutesunder which public business is conducted,is
one responseto the new complexityof the legal environment
of publicadministration.
387
The
inwbicbperformance
By environment
tothatofa bighissimilar
takesplace
auditing
the stateand local levels of government.The adoptionof performanceaudit techniques was aided by intergovernmental
audit trainingprogramstaught by GAO employees, interacprofessionalorganizations,and the
tion in intergovernmental
migrationof federalemployeesto state and local auditoffices
(Silva,1990,p. 7).
Because of these fiscal, ideological, legal, institutional,
and politicaldevelopmentsin the public administrativecontext, it is clear that performanceauditingis not a transitory
fad. In 1990, 36 states had an active, formal performance
audit or evaluation function (Table 1). In June 1989, the
Organizational changes at GAO. Changes in the leaderNational Association of Local Government Auditors
ship, staffing, and organizationalethos of the U.S. General (NALGA)was formed. It now has over 250 members. As
AccountingOffice since the 1960s have also contributedto
shown in Table 1, information compiled for the Local
the emergenceof performanceauditingat the state and local
GovernmentAuditor'sNewsletterin 1990 indicatesthat 33 of
levels of government.Under the leadershipof Comptrollers 193 U.S. cities with 100,000 or more population or at least
General Elmer Staats (1966-1981) and CharlesA. Bowsher
$100 million in general revenue now have a city auditor
(1981-present),the GAOhas quicklyevolved froma tradition- who is doing performanceaudits as part of normal audit
al focus on the detailedauditingof individualvouchersand a
operations. Some other substate government entities, such
reluctanceto make normativejudgmentsbeyond the legality as counties and special districts, also have a performance
or illegalityof transactionsto an organizationdeeply involved audit function.
in programevaluation and performanceauditing. In 1969,
three years after Staatstook office, the GAO issued its first
programevaluation,a "programresultsaudit"of the effectiveness of federal poverty programs(Havens, 1990, p. 35). In
Not all auditorsare performanceauditors;and not all per-
diverse,
volatile,
sector:
intheprivate
techfirm
andhighpressure.
unpredictable,
advernarial,
The ActivistAuditor
1972, the GAO published Standards for Audit of Government
Organizations, Programs, Activities & Functions (revised 1981
and 1988), called the Yellow Book by audit professionals,
which quicklybecame the standardfor performanceauditors
at all levels of government(Malan,1984, pp. 5-6). The GAO
was activelyinvolved in policy assessmentand debate during
the Vietnamwar and duringthe energy crisisof the 1970s.In
the 1980s, the GAOevinced an "increasinglyoutspoken concern about the financialcondition of the federalgovernment
and the fiscal policy it has been pursuingas well as in the
role that the Congress sought to assign GAO under the
Gramm-Rudman-Hollings deficit reduction mechanism"
(Havens,1990, p. 37).
Changes in staffing policies at GAO. Concomitant with the
changes at GAO in leadership and institutionalfocus came
importantchanges in staffingpolicies. Under the leadership
of ElmerStaatsand CharlesBowsher,the GAObegan recruiting widely, and by the end of the 1980s accountantswere no
longer the standardGAO recruit.GAO programevaluations
are performedby personnelwith degrees and expertiserangto
and public administration,
ing frombusiness administration
engineering, statistics,and all the social science disciplines.
"Inaddition,the staffincludespeople with advancedacademic trainingand line experience in virtuallyevery substantive
field touched by government,from defense to health care,
energy, and tax law"(Havens, 1990, p. 39). The environment
in which performanceauditingtakes place is similarto thatof
a high-techfirmin the privatesector:volatile,diverse,unpredictable, adversarial,and high pressure. Personnel with a
diversity of degrees are sought, and no single credential
seems especially strong or weak in relationshipto performance audit work (Funkhouser,1986). These initiativesby
the GAO soon began to "trickledown" from the nationalto
388
formanceauditorsqualifyas activistauditors.Activistperformance auditorshave the following characteristics:They (1)
are proactiveand holistic,in the sense of independentlyidentifyingthe majorsocial and policy problemsin theirjurisdiction; (2) go beyond the mandateof an audit initiatedby an
outside authorityif such is called for; (3) self-initiateimportant audits;(4) issue special reportssuch as budget surveys
and/or reportson financialtrendswithintheirjurisdiction;(5)
adhereto generallyaccepted governmentauditingstandards;
and (6) see the public (and its representatives)as their ultimate client, ratherthanthe audited,or management,as in traditionalfinancialauditing.
A case in point is the InternalAuditDivisionof the Office
of the CityAuditorof Portland,Oregon.The Portlandauditor
is independentlyelected on a nonpartisanticket.The Internal
Audit Division, which has responsibility for performance
auditing,consults with membersof the city council, department and bureauheads, and other interestedpartiesin order
to identify audit targets.These externallygeneratedsuggestions are combinedwith an internallygeneratedlist of audit
targets, "whichhave potential for cost savings or increased
revenue"(Tracy,1988, p. 7). The Portlandauditorissued a
self-initiated Review of Financial Trends for the City of
Portlandin 1989 and againin 1990.
A process for choosing audittargetssimilarto thatused in
Portlandis used by, or at least is availableto, most performance auditors,and the self-initiationof audit targets does
not depend upon the fact that the Portlandauditoris independentlyelected. The CityAuditorof KansasCity,Missouri,
is appointedby the city council and serves at the will of the
council, but the CityCharterprovidesas one of the duties of
the auditorthathe or she "carryon a continuousinvestigation
1991,Vol.51,No.5
Review* September/October
Public
Administration
of the work of all departmentsof the City, and report the
methods and resultsof these operations"(KansasCity, 1925,
pp. 247-248).Moststate and local performanceauditorswork
under the mandateof similarcharteror statutoryprovisions,
such as statesunset laws (Jensen,1979).
A recent investigationinto alleged misuse of funds by the
ExecutiveDirectorof the HousingAuthorityof KansasCitywas
transmutedduringthe performanceauditprocess into a widerangingcritiqueof the managementand administrative
practices of the Boardof Commissioners
of the HousingAuthority.
The audit report confirmed the misdeeds of the executive
directorbut went substantiallybeyond the narrowfindingsof
fraud.The reportfound that the boardof commissionershad
failed "to establishbasic financialcontrols and exercise due
diligence in overseeing the authority'saffairs"(KansasCity,
1989,p. i). Morespecifically,the reportfoundthatthe boardof
commissionersviolatedthe Missourisunshinelaw by holding
closed meetings at least seven times, violated the Missouri
housingauthoritieslaw by not holdingpublichearingsand by
not filing annualreports,and violatedvarioussections of the
federal InternalRevenue Code by failing to report excess
undocumentedtravelexpense payments(p. iv).
Table 1
State, Local, and Substate Governments with a Performance Audit Function, 1990
States
Alabama
Arizona
Colorado
Florida
Hawaii
Indiana
Louisiana
Massachusetts
Minnesota
Missouri
Nevada
New Mexico
N. Carolina
Pennsylvania
S. Carolina
Texas
Virginia
Wisconsin
Alaska
California
Connecticut
Georgia
Illinois
Kansas
Maryland
Michigan
Mississippi
Montana
New Hampshire
New York
Oregon
RhodeIsland
Tennessee
Utah
Washington
Wyoming
Cities
Counties
Special Districts
Arlington,VA
Aurora,CA
Austin
BatonRouge
Boston
Cincinnatti
Dallas/FortWorth
Glendale,CA
Independence,MO
KansasCity,MO
LakeWorth,FL
LongBeach, CA
LosAngeles
Milwaukee
NewportNews, VA
New York
Oakland,CA
OklahomaCity
Philadelphia
Phoenix
Portland,OR
Richmond
Roanoke
SanFrancisco
SanJose, CA
Scottsdale
Shreveport
Tallahassee
Tampa
Tulsa
VirginiaBeach
ChampaigneCounty,IL
ChesterfieldCounty,VA
Du Page County,IL
DutchessCounty,NY
FairfaxCounty,VA
HilisboroughCounty,FL
JacksonCounty,KS
KingCounty,WA
LaneCounty,OR
Countyof LosAngeles,CA
MetropolitanDade County,FL
MilwaukeeCounty,WI
MissoulaCounty,MT
MultnomahCounty,OR
OrangeCounty,FL
PrinceGeorgesCounty,MD
VenturaCounty,CA
WaukeshaCounty,WI
WayneCounty,MI
Cityof ClevelandSchool District
MetroTransitAuthorityof Harris
County,TX
SouthwestFloridaWater
ManagementDistrict
Source:Informationsupplied by the NationalAssociationof StateAuditors,Comptrollersand Treasurersand the NationalAssociationof Local
GovernmentAuditors.The authorwishes to thankMarkFunkhouser,CityAuditor,Cityof KansasCity,Missouri,for assistancein compiling
this table.
Savings and potential savings attributed to performance auditing
* Failureto act on a 1980performanceauditof the Tennesseeprisonsystemcost the state at least $6,000,000,when riotingoccurredseveral yearslater.
* A 1971 New York LegislativeCommissionon ExpenditureReviewperformanceaudit resultedin the reductionof requestedfunds for
manpowertrainingfrom$40 millionto $17 million.
* A 1986 performanceaudit of the Tennessee Departmentof Transportation
found that pursuinga "worstfirst"highway maintenance
strategywould conservativelycost the state an extra $500 million over twenty-fiveyears and led to the alterationof the maintenance
strategy.
TheActivist
Auditor:
ANewPlayer
inStateandLocalPolitics
389
In orderto generatethese findings,the performanceaudit
staff went far beyond the initialrequestby the mayor.In the
final report on the housing authority, the breadth of the
investigationis explained in the scope and methodologysection of the auditas follows:
The scope of the audit was established by the
City Auditor,in consultationwith the Mayor,to
include all areas over which [the Executive
Director]had discretionarycontrol,as well as factors that allowed abuse of discretion to occur.
This decision was based on audit standardsand
accepted audit practices. Governmentauditing
standardsrequire that the audit be designed to
provide reasonableassuranceof detecting abuse
or illegal acts. The initial disclosures about [the
Executive Director's]questionable travel reimbursementsnot only indicatedpotentialabuse in
this area, but also suggested the potential for
irregularitiesnot yet discovered. Further,to the
extent that abuses or illegalacts are discovered,it
is importantto identify the causes so that the
likelihood of similar future incidents can be
reduced(p. 2).
The city auditor'sreferencesin this statementto "potential
not yet discovered,"and to the requirements
for irregularities
of governmenttauditingstandards"are important.The auditor took a proactivestance at the very initiationof the audit
and justified that stance as required by generally accepted
governmentauditingstandards.
Tbe mandates of the GAO YellowBook. The conceptual
base for activistperformanceauditingis found in the mandates of the GAOYellow Book. In additionto the expected
principles of auditor independence and responsibilityand
stipulatedstandardsfor field work, methodology, evidence,
and quality control, the Yellow Book contains standardsfor
performanceaudit work that clearlypoint in the directionof
proactiveauditing.Read in its entirety,chapterseven of the
Yellow Book, "ReportingStandardsfor PerformanceAudits,"
requiresthat the auditorpursue and fully disclose all significant matters brought to light by the audit investigation.
Specifically,
The reportshould include a full discussionof the
audit findings, and where applicable, the auditor's conclusions;.... The report should include
the cause of problem areas noted in the audit,
and recommendationsfor actions to correctthe
problem areas and to improveoperations,when
called for by the audit objectives;....The report
should include all significantinstances of noncomplianceand abuse and all indicationsof illegal acts that could result in criminalprosecution
that were found duringor in connectionwith the
audit;...[and]The report should include a listing
of any significant issues needing further study
and consideration (General Accounting Office,
1988, pp. 7-4, 7-5, 7-7).
390
It should also be noted that the Yellow Book requiresthe
auditorlogicallyand systematicallyto plan the audit so as to
facilitatethe uncoveringof problematicprogramresults and
questionablemanagementpractices."Auditorsshould design
the audit to providereasonableassuranceof detectingabuse
or illegal acts that could significantlyaffect the audit objectives"(GeneralAccountingOffice,pp. 6-3, 6-11). Thus,under
GAOstandards,a professionallydesigned and executed performanceauditis almostby necessityan activistperformance
audit.
Obstaclesto activistauditing.This is not to say that activist
auditingis easy. Thereare manyobstaclesto activistauditing,
and many of the politicaland culturalchanges that have contributedto the emergence of activist performanceauditing
may also serve in some circumstancesto militateagainst its
successfulpractice.Electedofficialsand public managersare
not eager to share power and controlover policy with other
politicalactors,and their time framesare often much shorter
than those of audit professionals(Waltonand Brown, 1990,
pp. 6-7). It can take as much as eighteen monthsto complete
a full-scale performanceaudit. The results of performance
audits are seldom, if ever, received with universalacclaim;
there are always persons and groups in and out of government whose political agendas are threatenedby scrupulous
examinationof policy processesand outcomes.Auditorshave
lost theirpositionsas partof the politicalfalloutfrom controversial performanceaudits, and the placementand independence of the auditorwithin the structureof governmentwill
alwaysbe problematic.
Manytechnicalproblemsalso exist in the practiceof performanceauditing.Legislativeintent may be very difficultto
ascertain,policies may have multiplegoals, the data available
to the auditormay be suspect for a numberof reasons, and
little or no agreementmay exist on the performancemeasures to be utilizedin assessingpublic programs(Downs and
Larkey,1986). The auditprofessionitself does not presenta
united front.Controversyand debate has been ongoing over
the revisions of the Yellow Book standards since 1972
(Greathouse and Funkhouser,1987-1988), though the disagreementsoften appear to be over mattersof detail rather
than central principles. Of course effective activist auditing
depends partiallyon the training,personality,and political
courageof individualauditors.
Conclusion
If one were to do a comparison,perhapsusing newspaper
content analysis, of the principal policy issues and policy
actorsat the state and local level in the 1970s and the 1980s,
one would be sure to find severalnew issues and at least one
majornew playeremergingin the 1980s. Cityand state auditors now regularlycommenton public issues in the press and
are centrally involved at many stages of the policymaking
process. This of course reflectsthe new politicalprominence
in the 1980s of the ComptrollerGeneralof the United States.
At all levels of Americangovernment,the audit function is
now centralto the process of governing.
Review * September/October
PublicAdministration
1991,Vol.51, No. 5
It is importantthat elected officials,public managers,students of public administration,
and the citizenrybe aware of
this new player in state and local politics. Legislatorshave
much to gain from developing a good working relationship
with performance auditors in their governments. Elected
executives can likewise use all the help they can get in negotiatingthe highlychargedpoliticaland administrative
environment of the contemporaryera. Elected officials can draw
upon performance auditors for intellectual countervailing
power against the technical experts in both their own and
each other'sstaffsand those employedby interestgroups.
Public agency managers and directors should see their
performanceaudit colleagues as importantpartnersin the
movement to restore efficiency and accountabilityto public
administrationin the era of cutbackand crisis management.
As KarenWaltonand RichardBrown have cogently argued,
both elected officialsand public managerswill benefit in the
long run fromthe presence of an effectiveperformanceauditor, and legislatorsshould act to provide the auditorwith a
stronglegislativemandateand enough independenceto shelter the auditorfromundue politicalpressure(1990, p. 8). At a
minimum,a performanceauditorshould be appointedfor a
fixed term of office, and the termshould probablybe at least
three years. Some of the benefitsto agency managers,legislators and the public are as follows:
* Financial savings. A 1986 performanceaudit by the
Tennessee Departmentof StateAuditprojectedan extra
$500 million expense over 25 years as the result of a
"worstfirst"highway maintenancestrategy.The result
was a significant alterationin the state road maintenance program(Bragg,1986,p.5).
* Facilitation of legislativeoversight.Performanceaudits
produce information regarding all facets of agency
operations, including agency rules, managementprocesses, and organizationstructure.
Public administrationscholars,especially those interested
in administrativeethics, should find the performanceaudit
function particularlyinteresting. The activist performance
auditoris not just a new player in state and local politics, he
or she is a player with some interestingdifferences.One of
the most arrestingcharacteristicsof the performanceauditor
is their professional bias toward disclosure. As E. E.
Schattschneider(1960) and others have documented, the
normal bias of governmental players is secrecy and a
closed-system approach, especially in policymaking. A
corollaryto this bias toward openness is that performance
auditorstend to view the public as their ultimateclient. City
and state auditorsthus play a crucial role in the mediation
of the tension between meritocracyand democracyso characteristic of contemporary politics. Performance auditors
refocus attention on what MarshallDimock has recently
called "the centralpurposes of the field [of public administration]:service to citizens and facilitationof effective citizens"(1990, p. 21).
James P. Wesberry,a past president of the Institute of
Internal Auditors, recently suggested that changes in
Americanculturehave underminedthe concept of accountabilityand have "eliminatedshame for the act of dishonesty.
We have substitutedexplanationswhich transferthe blame
to others-or to no one." The result,accordingto Wesberry,
is that the present generationof auditors"willhave to audit
the unashamed-those who have no fear of doing wrong,
who have no regretfor taking more than they deserve, who
feel regretonly if they have the 'bad luck' to be found out"
(1989, pp. 25-26). In such an amoralpolitical and administrativeculture, perhaps we should welcome the emergence
of new players in the great game of state and local politics
who possess a bias toward disclosure and carryabout a little book of publicly acknowledged and professionally
agreed upon principles and standards to which they feel
obligatedto adhere.
* Development ofperformance measures. The presence of
a performanceauditorencouragesagency managersto
require better recordkeepingand develop meaningful
measuresof agency and programperformance.
* Enhancement of policy debate. Performance audit
reportsoften raisethe scope of conflictaroundan issue
and frequentlyidentifynew or submerged issues.
Edward M. Wheat is associate professorof politicalscience at the Universityof SouthernMississippi.His research
interestsinclude administrativelaw and organizationtheory.
He has publishedarticlesin AdministrativeLawReview,Law
LibraryJournal, Law and Policy Quarterly,and other journals.
References
Bragg, Representative John T., 1986. "Potential and Performance: The Results
of Legislative Program Evaluation and Audit Agencies." Presented to
NationalConferenceof StateLegislatures,LegislativeProgramEvaluation
SectionSession(August),mimeograph.
Brown, RichardE., 1988. "PublicAdministration
WelcomesAccountingWith
Closed Arms."In RichardE. Brown,ed., Accountingand Accountability
in Public AdministrationWashington,DC: AmericanSociety for Public
Administration,
pp. 1-17.
Brown,RichardE. and RayPethtel,1988. "AMatterOf Facts:StateLegislative
Performance Auditing." In Richard E. Brown, ed., Accounting and
Accountability in Public Administration. Washington, DC: American
Societyfor PublicAdministration,
pp. 182-202.
TheActivistAuditor:A New Playerin StateandLocalPolitics
Denhardt,RobertB., 1984. "Chapter7: Beyond RationalAction."In Theories
of Public Organization.Monterey,CA:Brooks-Cole,pp. 150-175.
Dimock, Marshall,1990. "TheRestorativeQualities of Citizenship."Public
Administration Review, vol. 50 (Jan/Feb), pp. 21-25.
Dittenhofer,MortonA., 1988."Performance
AuditingSimplified."
In RichardE.
Brown, ed., Accounting and Accountability in Public Administration.
Washington,DC:AmericanSocietyfor PublicAdministration,
pp. 173-181.
Downs, GeorgeW. and PatrickD. Larkey,1986. TheSearchfor Government
Efficiency: From Hubris to Helplessness. Philadelphia: Temple University
Press.
Funkhouser,Mark,1986. "Staffingthe Tennessee PerformanceAuditGroup."
Legislative Program Evaluation Section Report (June), pp. 4-6.
391
In
Gary,T. Jack Jr., 1988. 'A Single Audit of FederallyAssisted Programs?"
Richard E. Brown, ed., Accounting and Accountability in Public
Administration. Washington, DC: American Society for Public
Administration,
pp. 160-172.
GeneralAccountingOffice, 1988. GovernmentAuditingStandards:Standards
for Audit of Governmental Organizations, Programs, Activities, and
Functions.Washington,DC:GovernmentPrintingOffice.
Greathouse,FrankL. and MarkFunkhouser,1987-1988."AuditStandardsand
PerformanceAuditing in State Government."GovernmentAccountant's
Journal,vol. 36 (Winter),pp. 56-60.
Harmon, Michael M., 1980. "Toward an Active Social Theory of
AdministrativeAction: Some Empiricaland NormativeImplications."In
Carl J. Bellone, ed., Organization Theory and the New Public
Administration.Boston:Allynand Bacon, pp. 176-218.
Havens, Harry S., 1990. 'What We Were, Who We Are: Even As It
Approaches70, GAOContinuesTo EvolveTo MeetThe ChangingNeeds
Of The Congress."GAOJournal(Winter/Spring),
pp. 33-42.
Hummel, Ralph P., 1989. "Toward a New Administrative Doctrine:
Governanceand Managementfor the 1990s."AmericanReviewof Public
Administration,vol. 19 (September),pp. 175-196.
Jensen, Jill E., 1979. "AgencyOrganization,Staffing,and Procedures."In
RichardE. Brown, ed., TbeEffectivenessof LegislativeProgramReview.
New Brunswick,NJ:TransactionBooks, pp. 14-30.
Kansas,Stateof, LegislativeDivision of Post Audit, 1989. PerformanceAudit
Report.SecurityProblemsat the YouthCenterat Topeka.
KansasCity;Missouri,1925. CityCharter.art.II, sec. 13, pp. 247-248.
Kansas City, Missouri, City Auditor's Office, 1989. Performance Audit:
HousingAuthorityof KansasCity,Missourf.
Kettl, Donald F., 1988. Government by Proxy: [MisIManaging Federal
Programs.Washington,DC:CQ Press.
Lee, Mordecai, 1985. 'Need for Legislative Oversight & Legislator
Expectations of Evaluation Staff."In The Joint LegislativeAudit and
ReviewCommissionof the VirginiaGeneralAssembly,Proceedingsof the
Conferenceon LegislativeOversight(October13-15),pp. 13-16.
Malan,RolandM., et al., 1984. PerformanceAuditingin LocalGovernments.
GovernmentFinanceOfficersAssociation.
Minnesota,State of, ProgramEvaluationDivision, Office of the Legislative
Auditor,1990.LawfulGambling.
392
Nalbandian, John, 1989. "The Contemporary Role of City Managers."
American Review of Public Administration, vol. 19 (December), pp. 261-
278.
Newland, Chester A., 1988. "Policy/Program Objectives and Federal
Management:The Searchfor GovernmentEffectiveness."In RichardE.
Brown, ed., Accounting and Accountability in Public Administration.
pp. 63-79.
Washington,DC:AmericanSocietyfor PublicAdministration,
Rosenbloom,David H. with the assistanceof Deborah D. Goldman, 1989.
Public Administration: Understanding Management, Politics, and Law in
thePublicSector,2d ed. New York:RandomHouse.
Salamon, Lester, 1981. "Rethinking Public Management: Third-Party
Governmentand the ChangingForms of GovernmentAction."Public
Policy,vol. 29 (Summer),pp. 259-278.
Schattschneider, E. E., 1960. The Semisovereign People: A Realist's View of
Democracy in America New York: Holt, Rinehart, Winston.
Schick, Allen, 1990. 'Budgeting for Results:Recent Developments in Five
Industrialized
Countries." Public Administration
Review, vol. 50
pp. 26-34.
(January/February),
Shannon, John and James Edwin Kee, 1989. 'The Rise of Competitive
Federalism." Public Budgeting and Finance, vol. 9 (Winter), pp. 11-12.
Silva, Gerald A, 1990. "Performance Auditing Now at All Levels of
Government." PublicAdministration Times, vol. 13 (February), p. 7.
Tennessee, State of, Comptrollerof the Treasury,Department of Audit,
Division of State Audit, 1990. Performance Audit: Department of Human
Services, FamilyAssistance Programs Procedural Denials.
Tracy, RichardC., 1988. "PerformanceAuditing: Catalyst for Change in
Portland, Oregon." Government Finance Review, vol. 4 (February), pp. 711.
Walton,KarenScheule and RichardE. Brown, 1990. "StateLegislatorsand
PublicBudgetingand
StateAuditors:Is Therean InherentRole Conflict?"
Finance (Spring),pp. 3-12.
InternalAuditor
Wesberry,James P., 1989. "ThePursuitof Professionalism."
(April),pp. 25-26.
White,OrionF. and CynthiaJ. McSwain,1990. "ThePhoenix Project:Raising
a New Image of Public Administrationfrom the Ashes of the Past."In
Henry D. Kass and Bayard L. Catron, eds., Images and Identities in Public
Administration.New York:Sage Publications,pp. 23-59.
Review* September/October
Administration
1991,Vol.51,No.5
Public